When do we sell?
Our core idea is to buy & hold for long term there by benefit from capital appreciation & dividend yield. But, following are the case under which force us to sell.
- When the stock is not performing well. We check for consecutive quarterly results to decide on selling.
- When market bull run is going to over. It is better to sell all stocks at this point else a bear run (recession) will destroy 80% of the yield
Now you can decide on:
- Whether to hold on a loss stock there by loosing all the profit earned.
- Replace a low performing stock (10% yield) with a high performing stock (50% yield)
Eg: A Reliance Communication investor started at Rs. 100 and watched till it grow up to Rs. 800 in 2008. There after the company started making loss and had to see the bottom price of Rs. 50. This is absolutely foolishness. We have to keep watch on the underlying performance of the stock. Performance is the basis of price hike or collapse.
Similar cases are with Suzlon Energy, Unitech etc.
Let me know if you have any queries on this.
Futurecaps Chief Adviser.