When to Sell

One of the hardest decisions small-cap investors face is knowing when and why to sell a stock. Monitoring a stock for changes in earnings and revenues should be done frequently. Changes in a company’s fundamentals and other announcements can signal a modification in a company’s growth. Wall Street may view a lack of growth as a loss of credibility or momentum and send your stock lower. Put a limit on your stock losses; if you are down big and the reasons you own the stock have changed, cut your losses and sell. On the flip side, when should we take a profit? An old saying comes to mind: “Pigs get fat and hogs get slaughtered.” Same idea here. Place a profit in mind and sell when you’ve made a specific gain, or sell enough to cover your original cost and the rest is gravy. Know your limits and practice discipline.