Share Selling Advice: Don’t Fall Victim To Seller Psychology
December 10th, 2009
Managing your portfolio is crucial at all times, but even more so when the economy is in a shaky situation, and the markets are jittery.
When a person sells shares is just as important maybe more important, than what a person buys. Most investors make the mistake of not selling, or selling for the wrong reasons.
The most common selling mistakes are not selling a stock which is still on the way up, and not selling when the stock is on the way down.
Example: You buy a stock at $4.50, it climbs to $5 then to $5.50, before falling away, down to $5.25, $4.85, $4.70 and so on down to $4. A tidy profit has turned into a substantial loss. What would you do – buy more? Sit on what you have, or sell?
At this point most investors suffer a real personal psychological struggle. Most hang on to the stock faced with this situation, justifying their decision by saying they’re taking a long-term position.
They hang on, hoping something will happen to make the price rise. Most investors mistakenly think their decision to sell is related to the cost of the shares. But the real issue is how much you could make or lose in total, not in relation to the cost. Selling is about more than covering your costs.
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