Things You'll Need:
- Wall Street Journal
- Financial Calculator
- Brokerage Accounts
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Step 1
Consider selling if the price has dropped substantially or remained stagnant for several months.
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Step 2
Think about selling if the price has risen to or beyond a target that you established when you bought the stock.
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Step 3
Note whether the company's fundamentals remain strong. You can get the information you need from the Securities and Exchange Commission, which makes corporate filings available for free (see FreeEDGAR.com, under Relates Sites).
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Step 4
Evaluate earnings trends, management changes, revenue growth and other basics to determine whether fundamentals are sound. Even if the stock price is sluggish or, for that matter, has hit new highs, you might want to hang on to the stock if fundamentals remain sound and growth prospects look good.
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Step 5
Visit your public library's business reference section and review reports by Value Line and Standard & Poor's. Do they project no price appreciation for the stock?
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Step 6
Consider changes in the competition. If an effective new player or several hot new players have entered the market, your stock's growth prospects could be in jeopardy.
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Step 7
Think about the company's product line. If the company depends on one product alone and has no plans of broadening its base, perhaps you should think about selling.
Comments
eschulze said
on 12/18/2008 In other words, don't play the market unless you have plenty of time for research!
TheTradersCoach said
on 11/23/2008 Step 7
In this volitile market, sell if you are not a highly competent trader.
These days, any stock can move against your trade 5, 10, 15%, in a flash - independent of any financial, fundamental, or technical factors.
John McLaughlin, Stock Trader - Consultant / Coach / Mentor
http://www.DayTradersWin.com
TheTradersCoach said
on 11/23/2008 Step 7
In this volitile market, sell if you are not a highly competent trader.
These days, any stock can move against your trade 5, 10, 15%, in a flash - independent of any financial, fundamental, or technical factors.
John McLaughlin, Stock Trader - Consultant / Coach / Mentor
http://www.DayTradersWin.com
Anonymous said
on 11/22/2005 As I personally practice, and discuss in my blog "Stock Picks Bob's Advice", I believe that setting sale points when making a stock purchase is a good idea. It is important to invest without emotional biases that may interfere with your own rational thinking.
As suggested by William O'Neill, in the CANSLIM strategy, it may be helpful to place a limit on how far you will let a stock drop after making a purchase. I place an 8% limit on my stock purchases. In addition, I like to sell my winners slowly, selling 1/4 of my position at a 30% gain, 1/4 again at 60%, 1/4 at 90%, 1/4 at 120%, and then 1/4 positions at 60% intervals. On the downside, if I have sold a stock once at 30% gain level, I will sell at break-even. Otherwise, I let a stock retrace only 50% of the highest sale point.
It sounds complicated, but with a good brokerage statement from Fidelity, I find it fairly easy to implement.
In any case, setting up your own strategy prior to purchasing a stock is very important if you are going to experience long-term success in investing! Bob
Anonymous said
on 11/22/2005 Determine whether it would be better to hang on to the stock until the one-year-and-one-day ownership mark and qualify for the long-term capital gains tax rate versus the higher short-term capital gains rate.