When to Sell
For me, selling a stock is often more difficult than buying it. If I've made money, I enjoyed the experience and I don't want to leave the party when there's still money to be made. It's even harder to sell if I'm behind. The game isn't over as long as I hold onto the stock, and there's always hope that it will go back up. But once sold, the loss goes on my permanent record.
It's easy to delay selling by saying "Let's wait and see what it does tomorrow." All too often putting off selling turns profits into losses and turns small losses into bigger losses.
Establishing a strict sell discipline is an effective antidote for seller's procrastination. The "COSC Growth" and "COSC Value" analysis chapters each provide detailed instructions for deciding when to sell.
In many instances, a condition triggering a sell signal for a growth investor wouldn't provoke the same response from a value investor. For example, a significant reduction in earnings forecasts usually triggers an automatic sell for growth investors, but wouldn't faze a value player. Conversely, a strong uptrending price chart often tells a value investor that it's time to sell, but the same event would signal to a growth type that the party is just beginning.
However certain events such as deteriorating fundamentals, significant earnings restatements, and announcements of large acquisitions warn all players that it's time to sell.