When to Sell a Stock

 When to Sell a Stock:

Sell only for valid reasons:

Wrong facts: You initially misjudged the management, business quality, or competitive moat.

Changing facts: The business fundamentals are deteriorating (e.g., poor capital allocation, worsening management).

Better opportunity: You need to free up cash for a superior investment.

Need cash: You have a personal financial obligation.



Do not sell for these reasons:

Stock is overpriced: Avoid selling solely based on valuation metrics like P/E. A great business often appears overpriced. Focus on long-term potential (next 10 years) rather than short-term price fluctuations.

Emotional or timing-based reasons: Do not sell just because the stock has gone up, you expect a short-term correction, or you want to lock in paper profits.



Key philosophy: If you made a mistake, accept it and move on. However, if your original investment thesis remains intact, the ideal holding period is "almost never."