April 25, 2008, Newsletter Issue #115: When to Sell a Stock
Tip of the Week
Each invester has a different idea about when to sell a stock - and that's how it should be. Selling your stock should depend on your personal investment goals and risk tolerance. If you're a smart investor, you have a "buy and hold" stock investing strategy, meaning that you won't be selling your stocks on a whim. Some investors choose to sell half of a stock each time the stock doubles. They then reinvest the money earned in a different stock. The benefits of this approach are that you lock in your earnings and avoid a portfolio that is weighted too heavily on your one or two top performing stocks. The downside is that you could lose out on the future growth of the company. Before selling a stock, consider the following questions. 1. What has changed with the company that makes you want to sell the stock? If everything is the same as when you bought the stock, what is it that made you buy the stock to begin with and why is that evaluation no longer valid? 2. 3. Where are you going to put the money? Is it going to benefit you more than the stock you have it in now?
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