I don't own NVIDIA, but if I did, would I sell with the stock up 15% today?
I'd likely trim my position a bit, but otherwise I'd keep holding.
The trickiest part of investing is knowing when to sell.
Here are 5 reasons why you would sell a stock:
1/ The company announces an accounting irregularity
This is a tell-tale sign that management is committing fraud.
They've now proven they can't be trusted.
Why would you give them your money when you can invest somewhere more reliable?
Escape!
2/ The theory behind why you bought the stock changed
Perhaps fundamentals deteriorated over the last few quarters. Or management was forced to cut the dividend.
Whatever the reason, if it didn’t work out how you expected, unload your shares and move on to your next idea.
3/ You think you can do better with a different investment
Opportunity cost is critical to consider.
If money is sitting in a stock going nowhere, perhaps it’s time to shift gears to something more profitable.
4/ The company gets acquired
The best time to sell shares is usually right when news of the acquisition breaks. The company being acquired often sees its shares jump immediately.
You can always buy shares of the acquiring company later if you’re still interested.
5/ You want cash to support your lifestyle
Maybe you want to take a vacation or need to pay tuition. Perhaps you need a new Tesla or want to fly to space with Jeff Bezos.
Investing is about growing your cash to spend on your wants & needs.
That’s the best reason to sell!
Now, if you were paying attention, you’d notice I didn’t say recession fears or market sell-offs are good reasons to sell.
If anything, they're opportunities to buy solid companies on sale.
Peter Lynch said, “the key to making money in stocks is not to get scared out of them.”
Any other reasons to sell? Drop them in the comments below.
