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