Investing is not a walk in the park. It involves a lot of thinking, planning, analyzing, and strategizing. You should know when to wait and when to take actions. Do you buy stocks?How will you know when it’s time to sell one or more of your stock positions? Here are some reasons why you should sell:
Check the company’s debt to equity ratio. This is the company’s ability to safely borrow money over long periods of time. If the debt is growing at an alarming rate, then perhaps it’s time to let go.
Public companies often hold quarterly earnings call wherein they give a report of their financial status. As an investor, you might want to attend, or at least get a transcript of each meeting, which should be provided by the company. If the earnings are not properly stated, or if there is something vague going on, let go.
Let go if the management’s ethics are questionable. You are more likely to lose more buying cheap stocks from swindlers than buying much expensive ones from legit companies.
If you don’t understand the business, then why invest? Invest in something which you are familiar with, otherwise you would find it difficult to follow the trend.
It is usually wise to see into the future. Would you be needing the money in a few years? If yes, then despite the fact that stocks provide some wonderful long-term investment, they are pretty unreliable to sell them out once you do need them in emergencies. Instead of getting more money, you might end up losing.
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1 Response to Do you need to sell?
steve Swanson
November 10th, 2009 at 10:19 am
A simple method that works well, is to just put a 100 day moving average on your stock or chart. When its rising, be bullish, when falling, bearish. Whatever is happening to a stock fundamentally, will be reflected in such a longer term average and can help you see what “big money” is up to. They can’t buy or sell millions of shares in one trade, they usually spread it out over days and weeks.
That will give you time to take action. The worst action is no action.