Selling stocks is easy but knowing WHEN to sell stocks is NOT.
This post was originally posted here. The writer, James Yeo is a veteran community member and blogger on InvestingNote, with username known as smallcapasia and has 903 followers.
More often than not, amateur investors focus too much on what to buy but don’t have an exit plan in place. They panic for many reasons:
- The share price goes up too high (should I cash in?)
- Share price crash to the doldrums (should I cut loss or hold on?)
- A significant change in business operations (Electronic components Serial System hopped on the Durian selling craze).
Hence, buying a stock at the right price is only one part of a successful investment, knowing when to sell is also critical.
My Selling Mistake
A long time ago, I bought into Facebook when it was trading at ~US$25 shortly after its IPO. I sold it for US$40 to lock in some quick gains, thinking that social media is over-hyped.
It doesn’t take too long for me to realize the mistake as Facebook continues to grow by leaps and bounds after that. And I would have made a 10x bagger (1,000% return!) if I wouldn’t have been so fixated on the short term gains!
Without further ado, here are 4 good tips on knowing when to sell and also to prevent you from repeating my sobering mistake…