There are two types of research you need to do but most of us focus on the first type. The most common research is of all the stocks trading which would do you buy? the second type of research we rarely do is when do you sell? Besides needing the money? The issue with selling is two fold – what if the price goes down? how much leeway do you give? and what if the price goes up?  Each of these actions are seemingly hard which means it is good to have some sort of rule before you start. In an article in the Globe and Mail Business section Dale Jackson interviewed some people to help you decide When to hit the sell button.

There are many metrics to help you buy and some you can use to help you sell.

If a price goes down 15 to 20% below what you purchased at – you will need to re evaluate the company to understand if the event is a one time thing or it is better to find alternatives.

If the 3 month earnings drops by more than 15%, it is time to find alternatives?

If the stock has gained in price and in relation to the rest of your portfolio you may want to rebalance your portfolio by taking profits off the table. This is the best element and is the easiest decision because you can use the profits to spend or diversify and you know you made a good decision to buy.

Go back to the reasons you bought the stock, does the economy or the company d0 something that changes the reasons you bought the stock? Sometimes when the company makes acquisitions – some you like, others you may not. Sometimes you like companies that use debt, sometimes you do not.

Linking to dividend paying stocks, one of the primary reasons for buying is for the dividend and the long term capital gain. Profitable companies tend to have higher shares in the long term, which means you can wait. Depending on the company, mergers happen and then you have to decide if you want to keep with the new company or find alternatives. There is no end to having alternatives, but with dividend paying companies there is no reason to make the decision right away. You have the ability to take your time.

There are more questions than answers, till the next time – to raising questions.