How to Decide When to Sell Your Stocks

Research companies before selling stock to determine if the stock may rebound over time.
i Jupiterimages/Goodshoot/Getty Images

Selling stock can oftentimes cause more anxiety than buying stock. Because the stock market changes each day, stock that was underperforming one day may be performing much better the next. Research your options before selling stock. Review your portfolio to determine which stocks should be replaced. A diverse portfolio helps you maintain consistent profits without undertaking as much financial risk. When selling stock, keep in mind that you will have to replace it.

Step 1

Review your stock portfolio each quarter to determine which stocks are losing money, which stocks are earning money and which stocks are stagnant. Research those stocks not making money or losing money to determine why. Study possible replacements to maintain balance in your portfolio.

Step 2

Research the companies you currently invest in. Look for changes in upper management or board of directors, changes in the overall company direction, new products and services and overall cash flow. Extreme changes may signal financial trouble for the company, which may result in a lower return for your stock.

Step 3

Compare the price of the stock you own with the overall marketplace. Stocks that show lower than average gains may never catch up to the average stock price.

Step 4

Ask yourself why you want to keep certain stocks that continually underperform. Understanding your reasons (both emotional and logical) may help you determine which stocks to sell.

the nest