Tuesday, June 17, 2008

Stock Selling Principles

Stock books tend to focus on what stock to buy, underemphasizing the importance of selling wisely. Here are some tips:

1. Buy Low and Sell High. However, "low" and "high" must be relative to future performance, not past performance.

2. The price and point at which one sells should be independent of the sell price. It should be based on speculation of future performance alone.

3. Here are 3 general approaches to selling points:

  1. Sell when the calculations are the opposite of those you used to determine when and what to buy.
  2. Sell at a specified time after you buy.
  3. Sell at a specified change from the buy point, either up or down.

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