One of the first questions you have when you begin investing on stocks is: When should I sell? and there’s not right or wrong answer to this question, it always depends, but lets about the two main reasons why peoples sells their stocks:
– Sell when the stock’s price is high (a winner)
But why would you sell your winners? if you did your research and everything still makes sense, wouldn’t make sense to hold on it?
One of the reasons to sell on your winners is that the growth in price is too high and doesn’t make sense, in that case probably it’s a good idea to sell and invest on another company.
– Sell when the stock’s price is low (a loser)
This one makes more sense, but as usual it depends, why did the stock price decreased?
is it a problem with the company in the long term? Then is probably a good idea to sell. Is it temporary issue or bad media? It will pass and the value will recover, in this case it’s better to hold.
As mentioned it will always depend, but don’t let your emotions take control of you and don’t make what Mr. Market wants you to do. Follow your principals and remember that the market always catch up with the company’s real value.
The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them. Stand by your stocks as long as the fundamental story of the company hasn’t changed.Lynch, Peter. One Up On Wall Street: How To Use What You Already Know To Make Money In (p. 82). Simon & Schuster. Kindle Edition.