How do I know when to sell a stock?

Personal financial needs can also dictate the decision to sell a stock. Sometimes, you may require immediate access to funds for emergencies, upcoming expenses, or other investments. Selling shares can be a quick way to access liquidity, especially if you have a substantial holding in a particular stock.

Selling a stock can be necessitated by a shift in your investment thesis. Initially, you may have purchased a stock based on certain projections or expectations. Over time, these reasons may no longer hold true. market conditions, company performance, or even personal financial goals can evolve, making it prudent to reevaluate your investment strategy.

Another compelling reason to sell a stock is when the company you invested in is being acquired. In such cases, the acquiring entity may offer a premium price for the shares, providing you with an opportunity to exit your position with significant gains. This scenario often leads to a spike in the stock price, making it a favorable time to sell.

Rebalancing your portfolio is another strategic reason to consider selling a stock. Over time, the performance of different assets in your portfolio can lead to an imbalance. To maintain your desired asset allocation, you may need to sell some stocks and reallocate the proceeds into other investments, such as bonds, mutual funds, or real estate.

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