Should i sell losing stocks

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If you missed the best 20 days in the market over that time span because you became convinced you should sell, and then reinvested later, your return would shrivel to just 0. As a result, financial advisors caution against making any big changes to your investment strategy based any one period of declines. One more thing to keep in mind: September tends to be a rough time for stocks, averaging a decline of 0.

Skip Navigation. Examine why you bought a stock in the first place and ask yourself if those reasons are still valid. You should have a reason -- or an investment thesis -- for each of your stock investments other than just wanting to make money.

If something fundamental about the company or its stock changes, that can be a good reason to sell. For example:. Of course, this list isn't exhaustive. If something substantially changes that contradicts your investment thesis, that's one of the best reasons to sell. Another potentially good reason to sell is if a company announces it has agreed to be acquired.

After an acquisition is announced, the stock price of the company being acquired typically rises to a level close to the agreed-upon purchase price. Since further upside potential can be quite limited, it may be wise to lock in your gains shortly after the acquisition announcement. Specifically, the way the company is being acquired affects whether selling your stock is the right decision.

A company can be acquired in cash, stock, or a combination of the two:. It's generally a best practice not to invest in the stock market with any money you expect to need within the next few years. But if you need the money, that's certainly a valid reason to sell. Perhaps you want to purchase a house and sell some stock to cover the down payment.

Or you may have children who plan to attend college in a few years, and you want to convert your stock holdings into more secure investments such as certificates of deposit CDs. Your investment portfolio can become unbalanced in one or more ways. That is why periodically rebalancing your portfolio -- which may involve selling some stock -- is necessary for most investors.

These are two of the most common circumstances preceding a stock sale:. In a perfect world, you'd always have spare cash to invest for every time you identify an attractive investment opportunity. Since that's probably not the case, you may decide to sell stock to invest the cash differently. There's likely nothing wrong with the other stock or ETF, but recognizing an excellent long-term opportunity elsewhere can be a valid reason to sell.

Any of the above are good reasons to sell a stock for a profit. Having earned a profit from an investment can further justify selling the stock to pay for a major purchase, your living expenses in retirement, or as part of your portfolio allocation strategy. But don't sell a stock for profit just because the price increased. Whether that happens over one month or several months depends on the market. Don't assume you have to unload all of your shares, either. Finally, never sell in a panic.

Skip to header Skip to main content Skip to footer. Home Becoming an Investor. Becoming an Investor. Illustration by Oli Winward. Stock investors have to spot potential hazards, too.

The pros have a similar approach. A Lofty Stock Price It's hard to let go of winning stocks — typically, they keep winning because the businesses behind them are great. A Falling Stock Price On its own, a falling share price is not reason enough to sell. A Dividend Cut Dividends are sacred to shareholders and companies alike, so when a firm cuts its dividend, take note. Or you may find a better investment. Selling Strategies If you've decided to sell, unload your shares in smart ways.

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