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Louis Ehrekrantz (The Ehrenkrantz Report) offers some excellent common sense advice on when to sell: "We have found that a suggestion to sell any stock is invariably countered with, 'Does that mean it won't go any higher?' In talking to other processionals, we find this is the most commonly asked question. There are six reasons to sell a stock. None of them involves the proposition that when an investor sells a stock, it must never go any higher in price in order for the decision to be validated."

When to sell a stock

1.- A stock must be sold because it has reached one's original price objective, without any fundamentals having changed for the better.

2.- A stock many be sold because from a portfolio standpoint, it may be prudent to raise the cash level.

3.- A stock may be sold because some anticipated news or event has been announce.

4.- A stock may be sold if the original reason for buying a stock has proved false.

5.- A stock may be sold when its valuation has become so rich that it could be vulnerable to market correction.

6.- A stock may be sold when another situation has presented itself involving either less risk or greater upside potential.

 

The Idea that after one sells a stock it would be unfortunate if someone else made another three points is greed personified. You do not have a contract stipulating that after you sell a stock, it will never go any higher.


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