McMurtry Investment Report & Model Portfolios

Why do we sell a stock?

February 15, 2024

It is more difficult finding the rationale for selling a stock compared to buying a stock.

There are several main reasons as follows:

If a single stock goes up in value and now represents more than 10% of your total market value of equities, it is important to trim back your position to below 10%. This type of sale is to reduce your portfolio risk.

When you purchase a stock, you know the reason for purchase, at least you should know. If the company’s direction has deviated so much from when you bought the stock in the first place, you may want to sell the stock.

If a company starts to trail its peers and has no plan to fix their internal issues, you will probably want to sell your stock.

Lastly, do not sell a stock simply because it has gone up in value. Many of the best portfolio managers sell their losers and continue to hold their winners.



Leave a comment

Your email address will not be published. Required fields are marked *