One of the main challenges of every investor is to know when to sell their shares.
It is very common that most appropriate to sell their shares when the market goes through a downward correction, but this is not always the right things because if the business fundamentals are solid would be missing the opportunity to accumulate more shares discounted prices.
Many investors at the time to sell is based on the price, if it has risen enough want to capitalize profits, and if you start to lose want to minimize the losses.
While it is true that investments are long term, there are reasons to be reducing positions in the short term, one must know how to recognize.
When business fundamentals deteriorate, this is a good reason to start selling the shares of that company. This implies mismanagement or changes in the prospects for its products.
You should also analyze the valuation of the company relative to its share price. If you determine that the shares are overvalued this is an indication that the price is reaching a ceiling and would be a good time to sell. One indicator is the price-earnings (P / E) ratio, if it is too high is an indication that the company is overvalued.
If the business fundamentals are solid it is best to keep the actions, and take advantage of a price drop to accumulate more. But if the fundamentals have deteriorated to the point that the company may go bankrupt, there is no need to think twice about getting rid of those shares.
If the shares of a company have gained considerable value to the point of representing more than 50% of your portfolio, then it is a good idea to sell these shares to rebalance your portfolio. It is advisable to do this exercise annually.
The purpose is to maintain proper diversification in your portfolio, always according to your investment plan. In addition, it is a good opportunity to use the proceeds of those investments in the acquisition of other undervalued stocks.
When buying shares you must have an idea or expectation of appreciation. If estimates that these actions will appreciate by 20%, you can use that reference to decide when to sell.
Likewise, a way to manage risk is by selling shares when they lose a certain percentage of their value. For example, some investors give the order to his broker to automatically sell the stock if they lose 10% of their value.
Maintaining a target price is a good way to determine when to sell your shares. You can start thinking about capitalizing your winnings when they have reached between 20% and 25% appreciation.
If you capitalized significant gains during the year, you must pay taxes on capital gains.
One way to reduce the tax impact is selling shares at a loss. This way you get rid of losing investment prospects savings in tax payments.
Investors generally tend to punish companies that fail to fulfill their social responsibility.
It may be that the company in which you invested, lately has been involved in practices that affect the environment or be transparent with their clients or their latest products conflict with your religious beliefs.
If these factors come into conflict with your principles or beliefs, then consider selling the shares of that company.
Obviously if you need money you can always turn to sell your shares. This step should be given as a last resort after having exhausted other resources.