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Written by Alexander de Albuquerque
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While quite a bit of time and research goes into selecting stocks, it is often hard to know when to pull out – especially for first time investors. The good news is that if you have chosen your stocks carefully, you won’t need to pull out for a very long time, such as when you are ready to retire. But there are specific instances when you will need to sell your stocks before you have reached your financial goals.
You may think that the time to sell is when the stock value is about to drop – and you may even be advised by your broker to do this. But this isn’t necessarily the right course of action.
Stocks go up and down all the time, depending on the economy…and of course the economy depends on the stock market as well. This is why it is so hard to determine whether you should sell your stock or not. Stocks go down, but they also tend to go back up.
You have to do more research, and you have to keep up with the stability of the companies that you invest in. Changes in corporations have a profound impact on the value of the stock. For instance, a new CEO can affect the value of stock. A plummet in the industry can affect a stock. Many things – all combined – affect the value of stock. But there are really only three good reasons to sell a stock.
The first reason is having reached your financial goals. Once you’ve reached retirement, you may wish to sell your stocks and put your money in safer financial vehicles, such as a savings account.
This is a common practice for those who have invested for the purpose of financing their retirement. The second reason to sell a stock is if there are major changes in the business you are investing in that cause, or will cause, the value of the stock to drop, with little or no possibility of the value rising again. Ideally, you would sell your stock in this situation before the value starts to drop.
If the value of the stock spikes, this is the third reason you may want to sell. If your stock is valued at $100 per share today, but drastically rises to $200 per share next week, it is a great time to sell – especially if the outlook is that the value will drop back down to $100 per share soon. You would sell when the stock was worth $200 per share.
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Written by Anthony Green
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When you buy stock in a corporation, you own part of that company. So as a part of a corporation, shareholder will be entitled to share the profits of the company.
Now all the shareholders can be benefited by 2 ways:
When a company pays out profits to the shareholder, the money received is called a "dividend". The corporation's board of directors chooses when to declare a dividend and how much to pay.
Or when performs well, the stock price will go up and shareholders can sell their stocks at a profit. This will happen when more investors want to buy stock in a company than wish to sell.
So if someone sees a good future of your pizza shop and they can expect that their money is going to grow with the company, they won't mind investing in your pizza shop. Example : If you have invested $1000 to buy 100 shares of a company at $10 each and the share price rose to $13 each, you would gain $300. That is equivalent to 30% return.
Why People Sell Stocks
There can be so many reasons behind that. A person may just need the money. He or she may have watched the stock price go up, and have a feeling that this is the right time to get out of the trade and lock in some profit.
Any bad news about the company or the industry, or a disappointing company's earning report can also motivate him to sell the stock. He may also sell stocks because he sees a better opportunity in some company.
For example, one may sell IBM shares, which is not moving, because he thinks he can make better profit in Microsoft. Most of time, investors sell the stocks because they have watched the price fall and in panic, they just want to get out of the trade before they lose even more.
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