When a Stock Does Not Qualify to be Held Anymore

While this reason might sound similar to the first reason to sell a stock, it isn’t.Instead, here we are talking about the good stocks in your portfolio. You must sell such stocks when, because of passage of time and due to fundamental changes in the companies, these stocks no longer qualify to be held anymore.

That is the reason you must run your investment checklist on your stock portfolio after a certain interval, say six months or a year.

If you realize that a company’s business has changed for the worse, like on any of the following factors, you must sell its stock.

* The company is facing increased competition and has thus lowered the prices of its products or services;

* The company is seeing a deterioration in its profit margins and/or cash flows;

* The management has made a wrong decision – like entering an unrelated business – that will could negatively impact the company in the future;

There could be other reasons to sell a stock, but these are the most common and obvious ones.If you find any of your stocks facing any of these situations, it will always pay to get out of the same.