Saldanha: Considering the astronomical rise in some tech stock prices, investors who would have sold as soon as these stocks crossed their fair value estimates would have probably given up significant gains. When to Ignore Price While Making a Decision to Sell a Stock It also involves considering a portfolio’s overall diversification, including trying to find as closely as possible new names that are in the same industry, geography, or market size. Finding new stocks to buy in place of ones you sell goes beyond price versus valuation. Second, once personal finance and risk considerations are satisfied, I think perhaps the most overlooked aspect of selling shares is the need to find alternatives.Sometimes owning a stock with a lower expected rate of return but also less uncertainty and lower volatility may be more palatable to investors who have a lower risk tolerance.
But there are a couple of other important considerations. Those are ultimately personal choices that are going to differ, of course, for each individual investor, but selling a strong and steady dividend payer that might provide regular income may not be an option for those investors who need that income, even if the shares have become a bit overvalued. The first, just to cover quickly, is tax and income considerations. So, how important is price to this process?įleck: Price is a key determinant, no doubt, but there are a few other important considerations I think investors need to make when they’re considering selling a stock. Saldanha: Well, I’d be lying if I said I don’t consider price the main indicator of whether I should buy or even sell the stock. How Important Is Price When Considering Whether to Sell a Stock?
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