Wednesday, 9 March 2016

Revisit: Knowing when to sell your shares

[First published on 3/9/14]

Below is an article by Motley's Fool. It was a burning question in me when I first learnt about investment.

http://www.fool.sg/2014/03/03/when-is-it-the-right-time-for-you-to-sell-a-share/


"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, it's time to part with your shares if either of these happen...

Internal
  1. P/E ratio goes sky high
  2. P/B ratio goes sky high
  3. Eroding fundamentals of the company
External
  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 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 from Uncle8888.

Replaced my running man wallpaper. Courtesy of Createwealth8888

2 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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