Selling an individual stock is either the easiest thing or the hardest thing for any investor to do.
Selling is easy when:
–you’ve found a similar stock to replace it that’s cheaper and has better growth potential
–you bought the stock of a mature company because the price was temporarily depressed. The share has rebounded and reached the price target you had in mind when you bought it
–the stock has been so successful that it’s reached such a large size relative to everything else you own that the size itself has become a risk
Selling is hard when:
–you become emotionally attached to a stock, forgetting that investing is an economic activity you’re doing to fund your retirement or send your kids to college
–you’ve made a mistake, and are in denial
–you’ve found a true growth company, whose stock has been a rocket ship ride so far. You know, however, it will come back to earth –hard–when it goes ex growth but don’t know how to identify the transition.
More on this over the next few days.