How to Decide When to Sell Stock

Evaluate a number of factors before you decide it's time to get out of a stock.

Instructions

Difficulty: Moderately challenging

Things You’ll Need:

• Wall Street Journal
• Financial Calculator
• Brokerage Accounts

1. Consider selling if the price has dropped substantially or remained stagnant for several months.
2. Think about selling if the price has risen to or beyond a target that you established when you bought the stock.
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).
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.
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?
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.
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.

Tips & Warnings

• Consider the tax consequences of selling stock. If you have taxable capital gains, you might want to take some losses to reduce your taxes.