Knowing When To Hold’em And When To Fold

There is quite a disconnect between the novice looking to make some kind of positive return and the insiders who know how the game is played when it comes to the stock market. Many have been lured in by the promise of positive returns but just like gambling have ended up losing their hard earned investments. Though there are some courses, paid and free, that one can take in order to better their prospects, it is an unfortunate reality that like most investment tools, there are pitfalls. For anyone looking to make meaningful returns on the stock market there is need to understand when to sell and when to hold on to stock.

The first thing to take note of is the state of affairs with the company or organization that the person has stocks with. These details are called the ‘fundamentals’ and are a major influence on how the share prices of the stock will perform. If a business’ fundamentals decline, this is a great reason to let go of their shares. This then gives rise to the importance of being up to date with economic and industry trends within your investment area.

Another reason to shift has more to do with other prospects rather than the stock itself.  Any industrious investor will keep abreast with developments in the markets. In situations where you come across a better performing stock or prospects that offer greater returns, it’s always a good idea to consider offloading your less lucrative portfolio. The challenge comes in being able to accurately pinpoint and select divestment decisions which will earn you better in the long run. Consulting a broker or advisor can mitigate losses in this direction.

Macroeconomic conditions also play a role in individual investment decisions. When a company files for bankruptcy, which happens a lot in the current economic times, it may be time to pack up. In most cases, bankrupt entities would have been bleeding income for extended periods before actually filing and as such their stock will more often than not be worth nothing to the shareholders.

In a nutshell, buying and selling of stock is not an exact science. Sometimes an investors needs to go with his guts while at other times reading into current affairs and the markets can make all the difference.

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