Page 28 - Waterfall City Issue 5 May 2024

Waterfall City Finance

WHEN TO SELL

A STOCK

By Wendy Myers, Head of Securities at PSG Wealth

W arren Buffet’s favourite #2: A decrease in company

growth sales
holding period for a stock
is “forever”, but even he
If a company’s sales growth has notably
acknowledges there are
valid reasons for selling a stock. Both slowed or its strategic direction,
management, or dividend policy has
professional and retail investors grapple changed, this indicates a key sell signal
with deciding when to sell a stock. for many investors.

In fact, it’s accepted wisdom that #3: Company acquisition
buying a stock is psychologically When news of a company acquisition
easier than selling one. breaks, the company’s share price
usually surges close to the agreed
Fundamentally, the two human purchase price. With limited room for
emotions that influence investors further gains, investors might prefer
when they consider selling a stock are to secure their profits soon after the
greed and fear. However, selling stock acquisition announcement, especially
is a necessary part of your investment if they anticipate potential impacts
journey, and there are right and on the investment’s future appeal or
wrong reasons for doing so. Wendy Myers, Head of Securities strategic direction.

To steer investors toward a more #4: Rebalancing your
rational approach to selling stocks, in which you have bought into a portfolio
there are several guidelines to consider: retail company, but the economic The need for investors to rebalance
environment has changed, so their portfolio ensures exposure across
#1: An investment outlook inflation is increasing. In this case, sectors and asset classes is maintained,
or strategy has changed you may limit your exposure to retail in accordance with your investment
Consider, as an example, a scenario shares. strategy. For example, you are selling

26 Waterfall City Issue 5 2024