If you have come across this article, there is a likely chance that you are wondering what your rights are as a company shareholder.
As an investor, you should know the myriad of benefits that come attached to owning shares or stocks because these can be of significant value in your investment portfolio. However, when it comes to investing, it is sometimes a lot easier to know when to buy a stock than it is to know when the appropriate time for selling it is. Unfortunately, one of the biggest mistakes an investor can make is selling their shares early. There may be inescapable times wherein you will feel compelled to sell them, especially when they have doubled or tripled in value.
Keep in mind, though, that there are extraordinary times when you should consider not taking early profits, especially with genuinely great stock. Sure, it may be a bit tempting to give in to the urge to make money, but before you contact any Transfer of Shares provider in the Philippines or Title transfer service provider in the Philippines, you may want to consider some aspects in helping you consider not selling them. So, if you have been contemplating whether to sell your stocks or not, below are tips on when it might be a good time to sell.
1.) IT HITS YOUR PRICE TARGET
Seasoned shrewd investors typically establish a price range, or at least a range, in which they would consider selling stock. They usually do this prior to or when they initially buy stock. It does not stop there, however, as each stock purchase comes with its own analysis of what the stock is worth. The current price the stock is at should ideally be substantially discounted to an estimated value. To illustrate, selling stock when it doubles in price can reap significant returns as it implies that an investor thinks that it is undervalued by fifty percent.
2.) DETERIORATION IN FUNDAMENTALS
As an investor, it is your responsibility to keep track of a firm’s stock price after you have established a price target. Along with this, it is imperative to monitor the performance of the business. One compelling reason to sell is if the business fundamentals start to decline. With keen foresight, investors will realize a deterioration in sales, cash flow, profit margins, and other operating fundamentals before the stock price dips. You may even want to read deep into the financial statements, such as filling footnotes that are likely overlooked as these can be potential indicators that stock prices may inevitably decline.
3.) BETTER OPPORTUNITIES COME ALONG
Before you think of owning a particular company’s stock, be sure to compare it with the potential gains that could have been obtained by owning another stock. After all, opportunity cost is a key benefit that could be obtained by taking an alternative. If you find that the alternative is better, then it makes more sense to sell the current position and buy the other stock.
4.) AFTER BANKRUPTCY
While this may seem obvious, it is worth noting that bankrupt companies are practically worthless to shareholders. Keep in mind, however, that it is important to sell and realize the loss immediately for tax purposes, as this will be used to offset future capital gains. Also, it may form a small percentage of regular income each year. If you choose to sell the stock right after bankruptcy, know that this will likely result in a considerable loss. However, you may still be able to recover a small percentage of your initial investment.
BOTTOMLINE
In many cases, investors may think that the decision to sell stock requires keen contemplation and forethought. Indeed, a lot of research goes into this decision as it is a combination of art and science. There is a myriad of considerations to take into account, such as the ones enumerated above. A good and common strategy is to sell as a stock rises so as to lock the gains over time and sell into losses so as to keep them from plummeting even further.
