When Should I Sell a Stock?
If the selection of the most promising share is not easy, it is often even more difficult to determine the right time to sell. In addition, people are reluctant to part with securities that they have included in their portfolio for good reasons in the sense of a long-term investment. Quite a few people then feel they have to admit to having made a wrong decision.
However, the buying and selling of shares should be viewed with a certain sobriety. The financial crisis that followed in the wake of the Lehman insolvency clearly showed that external circumstances can force people to dump a stock. If the reason why one decided in favor of a share no longer exists, the decision in favor of this share has been deprived of its valuation basis. If a dynamic growth outlook was the trigger for the purchase, it should be checked whether this growth has actually materialized or how long one would like to wait.
Sometimes a company also fundamentally realigns itself. If the new strategy cannot be understood and the perspective is not recognizable, this can also be a good reason to sell a security.
A very mundane motive for selling shares is the creation of liquidity. It is true that the capital invested in shares should no longer be touched, since the premature partial liquidation of a portfolio damages long-term asset planning. Nevertheless, special life circumstances or unforeseen events may force the sale of shares. This should not be viewed as a disaster.
- The long-term investment goal must be redefined and adjusted to the changed initial situation.
- If an extension of the time horizon is possible, the desired asset target can still be achieved, albeit with a delay.
- Otherwise, considerations must be made as to how a balance can be found and where cuts may be possible.
Even if individual shares were acquired with the intention of selling them in the short term anyway, the portfolio as a whole serves to build up assets over the long term. Any consideration of selling a stock should have this idea in mind. Generally, beginners in stock trading are prone to impulse-driven selling. This temptation should be resisted and a certain composure should be acquired.
