When should we sell stocks?

Every stock is not equal! Don’t sell any stocks just because you want to sell the stocks or because you already got some profits. During a tough situation in stock market, always remember that great companies with fair prices will gain you huge profit in long run.

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Every stock is not equal! Don’t sell any stocks just because you want to sell the stocks or because you already got some profits. During a tough situation in stock market, always remember that great companies with fair prices will gain you huge profit in long run. Therefore, if you want to sell some stocks to hold some cash and reduce the risk, always sell stocks, in your portfolio, those are

  1. having least durable competitive advantage
  2. having poor business performance recently
  3. having very high price relative to fair value

In term of using Jitta, those 3 will equal to

  1. having least average Jitta Score in the past 3-5 years
  2. Jitta Score is decreasing and recent business performance in Jitta Factor is less than 70
  3. stock price is very high compare to Jitta Line, approximately should be at least 20% above Jitta Line. (However it depends to Jitta Score too, the higher Jitta Score, the higher above Jitta Line percentage can be allowed)

When you stick with this strategy, you will never miss out the great fortune that great companies will provide you in the long term. Remember, if you invest in the right company and hold it long enough, you can turn $9,000 into $4,400,000 without doing anything.

As Peter Lynch said

You won’t improve results by pulling out the flowers and watering the weeds.
– Peter Lynch

Therefore, you should always keep watering your flowers and pulling out the weeds. Keep your money in the great companies all the time and it will reward you a great fortune, period.

Author: Jitta

Jitta simplifies financial analysis for value investors and financial advisors alike. Our stock-analysis platform offers actionable advice to help them make better investment decisions and generate higher returns based on a simple principle: “Buy a wonderful company at a fair price.” And we do that by creating Jitta Ranking, our proprietary algorithm that ranks stocks based on their profit potential. Returns generated by Jitta Ranking since 2009 has outpaced that produced by the S&P500 index by a large margin. Jitta’s technology processes information like a human mind, assessing complicated data and digesting it into an easy-to-use and intuitive format. Its key features include Jitta Score, an indicator of a wonderful company; Jitta Line, an indicator of a company's fair price; financial statements-made-simple Jitta FactSheet; Jitta Playlist, an intelligent screener and backtest system in one; and Jitta Portfolio, a smarter investment-tracking mechanism.

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