When to Sell a Stock, Pt.2

December 22nd, 2020

Last Thursday, we started talking about when is the right time to sell a stock. As I mentioned then, there is no right timeframe as to when you should sell a stock, but you should always re-evaluate your portfolio and ask yourself if it's the right time to sell a stock. In that same email, I mentioned two different reasons to sell a stock. Now, here are two more reasons to sell a stock:

You Foresee Business Declining

To invest in a company, you have to believe in it's job performance and it's future. Basically, you believe that company is going to grow and make money. When you don't see a company growing, it may be a good reason to sell your stock.

In an ideal world, an investor will realize a deterioration in sales, profit margins, cash flow or other key operating fundamentals before the stock price starts to decline. But the best way to predict declining business is to keep track of company news & economy news. You should also use the company's stock ticker history to make an informed guess of where the company is headed.

Personal Reasons

The reason why a lot of of people invest in stock is to make some extra money for the future. Personally, I went into stock trading so I can have a little extra money to go back to school in January. Mind you, this is NOT the best reason to go into the stock market, let alone to sell stock. Anyone who has dabbled in the stock market will tell you that stocks are meant to be a long-term investment.

However, there are sometimes personal reasons as to why people choose to sell their stock, whether it be seed money for a new business, purchasing a home, or any other reason. If this is your situation, then a helpful tip would be to make your decision based off which stocks you feel have the worst future prospects for growth, while keeping those that you feel have a better outlook.

Be sure to check in our future emails, to learn more about stock trading and get updates on the stock market.

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