Many investors put a lot of focus on the best time to buy a stock. However, knowing when to sell a stock is just as important. It is generally a bad idea to sell a stock solely because of stock prices movements. On the other hand, there are some situations that can be perfectly valid reasons to hit the sell button. Here are five of them.
- Your business has changed
There is no way around it: businesses changes – sometimes significantly and not for the better.
We would be talking about major acquisition, a change in management or a shift in the competitive landscape. When this occurs, we incorporate the new information and re-evaluate whether the reasons we bought the company in the first place still hold true.
We would consider selling if:
- A new competitive threat emerges and the company is unable to compete with the superior product or service
- New management is making reckless or questionable decisions