1. Investing in stocks is different to fund investment in the sense that here selling them becomes an art, as there's no point saying you have made a profit until you sell too.
2. At the end of the day, it’s cash in the bank that counts as wealth, not the daily marked-to-market profits in your stock portfolio.
3. Besides getting rid of "dud stocks" when there are other "market fools" to lap them up, there are several other reasons to dispose off your stocks.
4. When a stock price runs up too high too soon much beyond your target price, due to a random news item or sheer market speculation which have nothing to do with the company, it is better to "pocket your gains" and buy it back at a lower level once you are absolutely certain about its prospects.
5. You should dump your under-performing stock unemotionally if you are convinced of the potential of another stock to earn higher returns, without committing the mistake of encashing your "winners" for this purchase.
6. There are also personal reasons for disposing off a stock, like for portfolio re-balancing, change in your risk appetite, overgrown stock portfolio, or the stock having become too volatile for your liking.
7. A tip for routine profit booking in a "heated" market:-
a) Sell half your stock when your price target (set when bought) is reached.
b) Sell another 10% every time the stock rises by 10%.
c) If price continues to rise, find the reasons and revise the original target, if reasons are true.
d) If price falls, find if it is random; if not, revise your price target for selling without greed or emotion.
8. Simply put, you should sell a stock when you see no more "logical" or "rational" value left in it - as you can always buy it again after dispassionate evaluation.
9. There are also tell-tale signs of a "leaking stock", which you can read in my blog below:
https://iamrajen.blogspot.c...
10. If you "trade" in stocks, these basic tenets may also be helpful:-
a) Trade only what you can afford to lose.
b) Ignore scrips with low-volume trading.
c) Trade only in 2-3 scrips at a time.
d) Research your wish list thoroughly.
e) Fix a practical entry price and sale target beforehand.
f) Use stop losses to contain emotions and fear.
g) Book profits when reasonable targets are met without greed.
h) Don’t try to be a contrarian investor by averaging costs.
i) Remember that the last one holding such stock will suffer the greatest losses.
j) Bulls and bears may still make some money, but pigs get slaughtered in small-cap stocks.
11. Markets are unpredictable as they are an aggregate of all participants of different types at any point of time.
12. Even bluechips and moat companies can't remain immune from unpredictability despite the best ways of logical evaluations.
13. "Timing" buys and sells are, therefore, every individual's own perception of what's in store for the future.
14. That's why it's better for long-term investors, seeking wealth creation from their limited precious resources - of time, money and energy - to leave this job in the hands of MF managers by acknowledging that they are better equipped for it.
15. At the end of the day, it's also more economical in the long run to review and rebalance funds than stocks - if greed of "highest returns" is not the criteria of investment - and increase earnings, for further investment, through expertise in own professional field.
2. At the end of the day, it’s cash in the bank that counts as wealth, not the daily marked-to-market profits in your stock portfolio.
3. Besides getting rid of "dud stocks" when there are other "market fools" to lap them up, there are several other reasons to dispose off your stocks.
4. When a stock price runs up too high too soon much beyond your target price, due to a random news item or sheer market speculation which have nothing to do with the company, it is better to "pocket your gains" and buy it back at a lower level once you are absolutely certain about its prospects.
5. You should dump your under-performing stock unemotionally if you are convinced of the potential of another stock to earn higher returns, without committing the mistake of encashing your "winners" for this purchase.
6. There are also personal reasons for disposing off a stock, like for portfolio re-balancing, change in your risk appetite, overgrown stock portfolio, or the stock having become too volatile for your liking.
7. A tip for routine profit booking in a "heated" market:-
a) Sell half your stock when your price target (set when bought) is reached.
b) Sell another 10% every time the stock rises by 10%.
c) If price continues to rise, find the reasons and revise the original target, if reasons are true.
d) If price falls, find if it is random; if not, revise your price target for selling without greed or emotion.
8. Simply put, you should sell a stock when you see no more "logical" or "rational" value left in it - as you can always buy it again after dispassionate evaluation.
9. There are also tell-tale signs of a "leaking stock", which you can read in my blog below:
https://iamrajen.blogspot.c...
10. If you "trade" in stocks, these basic tenets may also be helpful:-
a) Trade only what you can afford to lose.
b) Ignore scrips with low-volume trading.
c) Trade only in 2-3 scrips at a time.
d) Research your wish list thoroughly.
e) Fix a practical entry price and sale target beforehand.
f) Use stop losses to contain emotions and fear.
g) Book profits when reasonable targets are met without greed.
h) Don’t try to be a contrarian investor by averaging costs.
i) Remember that the last one holding such stock will suffer the greatest losses.
j) Bulls and bears may still make some money, but pigs get slaughtered in small-cap stocks.
11. Markets are unpredictable as they are an aggregate of all participants of different types at any point of time.
12. Even bluechips and moat companies can't remain immune from unpredictability despite the best ways of logical evaluations.
13. "Timing" buys and sells are, therefore, every individual's own perception of what's in store for the future.
14. That's why it's better for long-term investors, seeking wealth creation from their limited precious resources - of time, money and energy - to leave this job in the hands of MF managers by acknowledging that they are better equipped for it.
15. At the end of the day, it's also more economical in the long run to review and rebalance funds than stocks - if greed of "highest returns" is not the criteria of investment - and increase earnings, for further investment, through expertise in own professional field.