A long-term investment is considered the backbone of all money-making investors. It’s popularly said, “Buy right, hold tight”. But deciding the right time to sell a stock is equally important for a money-making investor. If a stock is not performing well, it’s the right time to sell a stock and buy another right stock. Before you sell, do learn how to buy good stock.
Your decision to sell or hold a stock should not be influenced by your sentiments or others’ sentiments. Let data be your friend. Sometimes you may feel that the decision of buying a stock was based on technical analysis. So, it is not a good decision to sell. But remember change is the law of nature. You must keep evaluating your stock on a regular basis. Deciding when to sell a stock is as much important as buying and holding them. Not selling a stock is the costliest mistake you make sometimes.
question is ‘why’
The very first question which hits you would be: Why the hell should I think about selling my stock? And the answer is a number of factors that influence you. It might be news on TV about the stock you hold, or a friend’s call telling you that there is a storm on the way.
Don’t run and log in to your account for selling stock. Variation in stock price is a result of demand and supply like any other thing in the market. If more people are willing to buy a stock, its price will go up. And it will go down if people are not buying it. A sudden drop in price could be due to a market correction. While your sentiments push you to sell a stock, an analysis may push you to buy more, we will see how. Here are some points explained. They help you to make the right decision.
Stock price fluctuations
This is the first signal which triggers you to sell. But it’s not necessary that this fall in price is due to company action. This may be a result of investors’ sentiments or news in the global market. It’s possible also that company facing a real problem. There might be a serious issue with the company’s balance sheet. Whatever it is, you have to analyze carefully and see what’s happening. If the balance sheet of a company tells you the real story, follow it. Another side of the story is that you should sell the stock so that you could buy it later at a lower price. This will make your portfolio wealthier in the coming days.
chaos is real
Mr. Market may behave like an angry man sometimes. But the company may be in serious trouble as well. Even if the company is not hit by a market sentiment storm, you need to keep watching where the numbers going. Check balance sheet, quarterly results. Take a look at how the company is performing over some quarters. Is the company really making any profit? Which way is the debt to asset ratio moving? Is there a decrease in orders for products and services? You need to ask a lot of questions. The solution to these questions will lead you to the right path of decision.
Apart from the balance sheet alone, you may want to look for other reasons as well. While market fluctuations are due to some rumors, a real story also follows those rumors. Higher debt indicates a problem, but not always. The company’s expansion plans require a lot of money and this could only be arranged by borrowing from banks. Now if debt increases without any new investment, you need to think about it.
No matter what the company does, better research can save you from loss.
reumors are truth
We discussed the balance sheet and apart from balance sheet investigations. An impacting cause of concern is a change in the top management of the company. It is reumer some time, causing an unnecessary disturbance. But in some cases, it is the real reason. Try to find out from trusted news sources. Goodbye to a well-reputed and trusted CEO is of serious concern for investors. The new guy’s capabilities to run the company are always a matter of research. Do some research about him. His past performance and ability to run a company.
Your research about management will give you a clear insight into the future.
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