🏷️ When to Sell a Stock You Own
A practical guide to knowing when it’s time to move on — and when it’s better to hold tight.
“Buying is easy. Knowing when to sell is what separates the amateurs from the pros.”
🧠Why Selling Is Harder Than Buying
Let’s face it — most investors don’t have a plan for selling. And when prices rise or fall fast, emotions take over:
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“Should I lock in gains?”
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“What if it goes higher?”
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“Should I cut my losses?”
Without a clear framework, decisions get reactive — and often regrettable.
🧠Reminder: Great investors think ahead. Selling isn’t failure. It’s part of portfolio management.
âś… Good Reasons to Sell a Stock
1. The business has changed for the worseDeclining fundamentals, loss of moat, new competition, or a major leadership red flag.
2. Your original thesis no longer holdsIf you bought the stock for reason X — and X is no longer true — it might be time to exit.
3. It’s wildly overvalued vs. its fundamentalsIf valuation has far outrun earnings, and future growth looks priced in, trimming or selling may be smart.
4. You need to rebalance or reduce riskSometimes a stock becomes too large a piece of your portfolio. Selling a portion can lock in gains while managing exposure.
5. You’ve found a better opportunityCapital is limited. If Stock A has better prospects than Stock B, a swap might make sense.
⚠️ Weak Reasons to Sell (That Often Backfire)
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❌ “It went up a lot — I should cash out.”
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❌ “The stock is down — I can’t take the red.”
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❌ “Everyone’s talking about something else now.”
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❌ “I’m bored with it.”
📉 Example: Amazon fell over 30% multiple times during its rise. Long-term holders who sold out of boredom or fear often missed the real gains.
🛠️ A Simple Sell Decision Framework
🧠Tip: Use this as a quarterly check-in, not a daily decision. Selling well requires space to think.
🔄 Sell vs. Trim: You Don’t Have to Go All In or Out
Selling doesn’t have to be binary. Consider:
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Trimming a portion if a stock has run far ahead of value
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Keeping a “core position” in a business you still believe in
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Setting stop-loss levels for high-volatility or speculative names
📚 Analogy: Think of your portfolio like a garden — pruning doesn’t mean uprooting everything.
đź’¬ Quote to Remember
“The key to making money in stocks is not to get scared out of them.”
— Peter Lynch
👉 Read Next:
➡️ Building Your First Stock Valuation Checklist
➡️ The Difference Between Price and Value
➡️ Creating a Sell Strategy for Long-Term Holdings (Coming soon
This article was written by Itai Levitan at www.forexlive.com.