You won’t make money in the stock market if you don’t sell your stocks eventually. However, the timing of when to sell a stock is always the biggest question, and there are several variables to consider before deciding. One of those variables is based on the timing of buying the stock initially. If you bought it at the perfect time, you need to focus on selling it at the right time and reap the benefits. Buying is generally easier than selling when it comes to understanding the timing factor, but here are three factors you should recognize and consider selling a stock when you see them.
High Company Valuation
A high company valuation isn’t a bad thing, but it could be if it’s later determined that the valuation was too high. Take a close look at the company’s overall valuation compared to its competitors. If it’s much higher than the others to the point where the significant difference can’t be easily explained, then it may be time to think about selling. Every company and industry is different, though, and some investors have a hard time letting go of stock with such a high valuation. Depending on your current financial situation and overall goals, it may be time to sell a portfolio investment with too high of a valuation.
Drastic Rise In Stock Prices
Long-term financial success often means taking advantage of short-term gains when the opportunities present themselves. If you enter the stock market and the particular stock you purchased skyrockets to record highs in a matter of a few weeks or months, consider selling it right then. Many investors are tempted to ride the wave of greed and assume the price will continue rising. But more often than not, the price falls just as sharply as it rose. You can always rebuy the stock when it comes back down but take your short-term gains first by selling when the price rises dramatically.
When The Stock Purchase Was A Mistake
It’s normal to make mistakes when dealing with the stock market, no matter how much research and analysis you do. However, investors often have a hard time knowing when to acknowledge their mistake, sell the stock, and move on. This may mean taking a loss on the stock, but the earlier you sell, the less the potential losses might be. The stock you sold may rise soon after you sell, so once you make your decision to sell, stick with it and feel confident that you made the right decision.
Stock Investing Info is here to analyze your portfolio investment and help you determine whether it’s time to buy, sell, or adjust your investments. The overall goal is achieving financial success, which is defined differently by every investor. Knowing when to sell any given stock can be challenging, and we are here to help. Don’t hesitate to contact us at any time to put together a plan so you can feel confident in every investment decision you make.