Introduction to Shares

Guide: Getting started

When to sell

For many private investors a decision to buy is clear; the moment to sell is not. The thought process behind selling should be identical to buying and should refer to the reasons why you bought the share initially. A sell decision may occur when you think the share is fully priced and is unlikely to move considerably further in the near term. You also know about opportunity cost and you have identified other investment opportunities that are much more attractive elsewhere.

There are two clear points about making gains on shares which you should pay attention to. In the first place, no one ever became poor by taking a profit. There is little need to hang around waiting to squeeze those last few pennies of profit out, when the money could be more effectively invested elsewhere. Secondly, investors often have an irrational faith in the underlying value of their shares. When the share is worth less than the original price, be prepared to re-evaluate your position and sell if necessary. You may be better off looking for a more attractive investment.

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