Revisit: Knowing when to sell your shares

[First published on 03/09/2014]

It became a slow burning question after I have embarked on my investment journey for some time. Why? Because it's all too easy to buy but when it comes to selling... it's a different story.


"Buy because of the price but don't sell for the price. Sell because it's value has depreciated or there's a better value investment elsewhere to park your money."


In essence, I have categorized the reasons for us to sell below...


Internal factors that determine selling of your shares

  1. P/E ratio goes sky high
  2. P/B ratio goes sky high
  3. Eroding fundamentals of the company

External factors that determine selling of your shares

  1. Poor outlook of business sector eg. competitive edge has worn off, declining industry
  2. It is at a downside of a business cycle (for cyclical businesses)
  3. In macroeconomics point of view, when market sentiment is turning bad -share prices can't break through long term resistance and start to break through support levels.

Why must we sell? 

So that we can free up our capital to do fruit picking in times like this!



"The game of patience in stock market is not how long you hold onto your stocks, it is waiting for the right time to sow and harvest. So that realized gains are more than realized losses."


For my dory memory... now I have this wallpaper courtesy of Createwealth8888.


***

Comments


  1. How about short-term trading and long-term investing on the same stocks all over again? Wallpaper?

    ReplyDelete
    Replies
    1. That's my notion of 'sow and harvest'. Many only know how to sow. Actually I am guilty of that too.

      Delete

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