Why do many advices and concentrate on buying stocks only?
Philip Fisher wrote, "It is only occasionally that there is any reason for selling at all." That occasional reason is "the deterioration of a company's underlying business. “According to him, there were only two possible causes of a deteriorating condition: bad management or decreased prospects for a company's products.
When the business is no longer great and it's time to sell the stock. How about if we see coming strong turnaround?
Still there is some selling for some stocks in the market. It could be due to so many reasons such as fear, cutting losses, losing faith on the market, settlement of credit or margin and rebalancing portfolio etc.
Traders or investors could make some terrible mistakes here.
They sell winners and keep losers
They sell low and buy high later
In my view just like buying stocks, selling stocks are also equally important. Execution of selling stocks without a plan could lead to poor results.
In a trading or investment plan there should be selling plan before buying any stock.
Are we going to keep as long term investment without selling?
Are we going to buy it for mid tem investment?
Are we having some targets?
Are we selling stocks before the margin or credit call?
Most investors or traders sell stocks thinking price has gone up it’s time to take profits, or
The price has gone down so it's time to cut losses.
Traders like to sell stocks when they meet the stop-loss order as well. But selling good business could miss mid and long term gain.
Selling and reducing current holdings for diversification
Sell stocks because they need money
In short, selling stocks is not as easy as buying stocks.
Mastering the art of selling stocks also could minimize risks involved in stock markets.