When to Sell Stocks

When to Sell
Stocks
By
www.ProfitableInvestingTips.com

When the market has been on a long
term rise it is often wise to consider
when to sell stocks.

http://www.profitableinvestingtips.com/pr
ofitable-investing-tips/when-to-sellstocks

Even buy and hold long term investors
need to get out of stocks that have run
their course.


In retrospect, fundamental analysis of
saddle makers, wagon makers and
carriage makers at the start of the 20th
century would have told investors that
these businesses would shrink as
Henry Ford and others began to mass
produce automobiles and trucks.

There was a time when investment
analysts told their clients to never sell
IBM.


Big Blue was the king of the computer
world. Then Apple came along and
invented the desktop computer.


IBM missed the boat and its stock fell
by half and it cobbled together the PC
system.


As Bill Gates says in his book, The
Road Ahead, IBM created multiple
billionaires who fixed the mistakes in
the design of the IBM PC.


When Apple went public in 1985 it was
not only time to buy Apple but when to
sell stocks like IBM that were so heavily
dependent on main frame computers.


The stock market has gone up for a
year and many stocks are probably over
bought.


With the likelihood of a market
correction in mind here are a few
thoughts about when to sell stocks and
how to decide which ones.


Interest Rates and
Stock Prices


We recently wrote about possible stock
picks for 2014.


Because interest rates are likely to rise
this year we noted that utility stocks are
likely to fall in price.


At the same time their dividends will
likely remain the same.


So we suggested that one might
consider buying utilities such as the
Southern Company after rates go up.


If you believe that the Federal Reserve
will continue to pare back its
quantitative easing stimulus program,
when to sell stocks such as utilities is
probably right now.


As the economy slowly improves rates
will go up and high paying dividend
stocks like utilities will go down in value.


These are great stocks for the long term
but not on the eve of a rate hike. When
to sell stocks like these, is when times
are good and rates are low.


When to buy stocks like these is when
rates go up, their prices go down, and
the value of their dividends rises
significantly.


Overbought
Markets and Stocks


There are times, perhaps even now,
what an individual stock or the entire
market has been going up for months or
even years.


New investors enter the market with the
perception that any stock they buy will
go up in price.


However, there are sectors such as
gold investments that have recently
gone bad.


It should have been obvious to smart
investors that gold would not go up
forever.


New investors believed the hype that
currencies would fail and that gold
would be king.


The market was overbought and when
interest rates started to go up and the
economy started to mend and when the
US dollar rose, gold took a nose dive
and fell more than fifty percent.


When to sell stocks is when the entire
world is buying them and driving prices
up beyond where fundamental dictate.


When considering when to buy stocks
look at profit to earnings ratios, intrinsic
stock value, margin of safety, and
technical analysis of market sentiment.


When to sell stocks is when these
fundamentals are bad and the market is
ignoring them.


When to Sell Stocks

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