3 Bad Reasons to Sell Your Stock

There are many good reasons for deciding to sell your stock. At the same time, there are several reasons that are not sufficient to justify selling your stock. Here are a few bad reasons to sell your stock.

1. Temporary Losses

One of the most common reasons that investors sell their stock is temporary losses. The stocks that they have invested in go  downhill, and they quickly cash them out. This is not a good reason to sell your stock, and you should not give into this temptation. Many stocks are going to go through downturns temporarily. This does not necessarily mean that you need to liquidate your shares. Many companies have gone through a downturn and then quickly rebounded to become very successful. When the price of a stock decreases, you do not need to sell unless something fundamental about the company has changed. If all of the facts that attracted you to the company in the first place are still intact, you need to keep your stock. Many successful investors know that the best time to purchase a stock is when it is down. The masses tend to sell their stock after losses, and the professional investors come in and buy it from them before the rebound.

2. Inherited Stock

Another common reason that investors will sell their stock is that it was inherited from someone. Just because you inherit something does not necessarily mean that you need to liquidate it immediately. When you are the recipient of inherited stock, it can be a huge benefit to you as an investor. When you inherit stock, you are going to be able to bump up the cost basis of the stock to the market value on the day that you inherited it. This means that you could potentially take advantage of even more growth in the stock without having to pay the full amount of taxes. If the company is sound financially, then there is not a reason that you should automatically sell the stock. Consider keeping it and allowing it to grow even further.

3. Expert Recommendation

The market is filled with experts that enjoy giving their opinions about many different stocks. Typically, you will hear these recommendations given out with advice that you should sell your stock. They will issue blanket statements such as "strong buy" or "strong sell." When you are investing, you are going to have to learn to do your own research and make your own financial decisions. Those that blindly follow the suggestions of stock experts are going to find themselves missing out on opportunities more often than not. If you feel good about a company, there is no need to sell your stocks quickly because one of the financial experts recommends doing so. Follow your own investment strategy and investment rules. These should be the only factors that you look at when you are deciding when to sell.