Knowing When To Sell

There is no magic involved in deciding when to sell a stock. You should track the companies you own and if the prospects have waned since you bought the stock, it's time to cash out and look for a better investment.

One tactic is to set trailing stops when you buy a stock. You might tell yourself that you'll look at the stock if it goes up by 25%. On the other hand, you'll re-evaluate the stock after a 20% decline.

At those points, you can consider whether you still want to own that company. Selling at a 10% or a 20% loss can be a worthwhile move, if it helps you avoid a 50% or a 90% loss.

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