| It has generally been observed that most | | | | It is important that you continuously |
| investors find it easy to make an | | | | update yourself with the performance of |
| investment decision but when it comes to | | | | the company whose shares you have |
| selling they find themselves in the | | | | bought. In the financial world, too much |
| dark. You may have purchased the shares | | | | of a good thing may spell trouble. When |
| after a careful analysis. Yet if the | | | | you find that the price of a share has |
| situation changes, warranting a review | | | | gone beyond its true value, immediately |
| of your decision, you should not | | | | sense there is trouble. The best option |
| hesitate to reconsider your policy. As | | | | is always to sell when you find that the |
| an intelligent investor, you should know | | | | share is overvalued, and buy it back |
| when to sell your stock to book profits | | | | when the market forces bring about a |
| or to avoid loss. Selling stock is an | | | | correction. Remember selling an |
| integral part of the investment process. | | | | overvalued one makes more business sense |
| Go through the following arguments and | | | | than buying an overvalued share. |
| then decide whether you wish to retain | | | | Major changes in the company's |
| or sell it. | | | | management or policy |
| The fear of making a loss | | | | If there is a major overhaul in the |
| The primary reason why people hold on to | | | | policy or the management of the company |
| their stock is that they are afraid to | | | | whose stocks you are holding, take it as |
| make losses. In a market, you make loss | | | | a signal to sell your stock This is |
| only when you sell it. Even though the | | | | because you bought it based on its |
| prices may have fallen, you do not | | | | fundamentals and its sound business |
| actually make a loss till you actually | | | | model. If there is a change on the very |
| sell it. Before selling, research the | | | | basis on which you make your decision, |
| market reports to ensure whether the | | | | you should sell it. For example, if the |
| fall is temporary, for example, it may | | | | company has a new CEO, the person may |
| be because of the cyclical nature of the | | | | take it off the direction it is |
| company, or due to a one time factor. In | | | | presently pursuing. |
| such scenario, chances are that the | | | | All said, if the share deserves to be |
| stock will pick up. On the contrary, if | | | | sold, you should not worry about |
| the performance has gone down due to | | | | recovering losses, if any. Sell the |
| more permanent reasons, you should sell | | | | share, recover the money and invest in |
| it. This way even though you will make a | | | | another company with a better track |
| small loss you will be spared from | | | | record and a promising future - for this |
| making a bigger one when the prices | | | | is what the game of investment is all |
| actually hit rock bottom. | | | | about. |
| Is the stock overvalued? | | | | |