Selling and Holding mistakes Checklist (Part 5 of 5)

A. Common Selling Mistakes

􀂆 Price is down, but fundamentals remain solid
􀁻 Prices fluctuate for reasons that are not always rational.
􀁻 The price will follow fundamentals in the long run.
􀁻 Consider buying more shares.

􀂆 The company has short-term problems
􀁻 Do not make a rapid decision.
􀁻 Look at the long-term impact of the news.

􀂆 Selling winners to lock in gains
􀁻 If you sell all your winners, you will be left with losers.
􀁻 If your winners are high quality companies, they are likely to
become even bigger winners.

􀂆 Selling because the price reaches a predetermined limit
􀁻 An executed stop-loss order will bring you less money than if
you sell at the current price.
􀁻 A limit order at a higher price, without regard to fundamentals,
may generate additional taxes and eliminate your chance of
future gains.



B. Common Holding Mistakes

􀂆 When fundamentals deteriorate
􀁻 If your evaluation indicates this is a long-term problem, holding it
is likely a mistake.
􀁻 If you wouldn't buy this company today, don't hold it.

􀂆 Trying to get even when you have a paper loss
􀁻 You can't change the past; what matters is the future.
􀁻 Would another stock be a better investment? Prepare an SCG.
􀁻 Remember the NAIC Rule of 5.
􀁻 You may be able to offset some capital gains with this loss.

􀂆 Holding inherited stocks out of loyalty
􀁻 These stocks may be inappropriate for your financial situation.
􀁻 The person who left you the stocks would want you to do what is
best for your circumstances.

􀂆 Not following your stocks after purchase
􀁻 "Buy and hold" does not mean "buy and forget." Companies change.
􀁻 Keep up with the news on the company.
􀁻 Maintain your SSG and PERT.