When to Sell Stock like Warren Buffett

1.  When a higher return is expected by trading to another asset (to include the loss incurred by capital gains tax).

2.  When the company changes its fundamentals.



When to Sell Stock like Warren Buffett

Summary

In this lesson, we learned the importance of always understanding the consequences of our actions. Buying and selling stock can have an enormous impact on our success as an investor. The most important thing to learn from this lesson is the emotional decisions when selling stock can often lead to very poor results.

We learned that there are two major rules for knowing when to sell stock:

1. We sell stock when we can trade the capital into an investment that will produce a larger return after accounting for the capital gains tax paid (state and federal). In addition, you’ll want to ensure the risk assumed is comparable for the return received.

2. We sell stock when the business changes its fundamentals. This could mean the way they manage debt. The future outlook for earnings is decreasing…etc


http://www.buffettsbooks.com/security-analysis/when-to-sell-shares.html