(10) Portfolio Rebalancing
It is one of the most valuable & proven tips to know best and right time to sell stocks. Asset allocation is an important aspect of stock investment.
In stock markets, you can allocate your funds into stocks, mutual funds, bonds, and even keep some cash for unique opportunities.
You can earn a small but stable income with a portfolio of 75% bonds, 15% stocks, & 10% cash or money-market funds. Similarly, if you are looking for balance between risk & return then you can allocate your money in 50% stocks, 40% bonds, & 10% cash.
On the other hand, those who prefer to take high risk for high return then allocate money in 80-90% stocks, & 10% bonds or cash.
However, you need to rebalance your portfolio depending on level of risk vs. rate of return. A smart investor should rebalance his/her portfolio annually.
Rebalancing is a good way to trim holdings of a stock whose price is soaring. You should never allow excessive exposure of single stock in your portfolio. For example, if you own 20 stocks then each stock should not exceed 5% of total holdings.
[Read Also: 16 Tricky Ways To Identify & Pick Multibagger Stocks]
(11) Bad Management Decisions
It is one of the most significant & proven tips to know best and right time to sell stocks. Good management decisions are significant to run a successful business.
It helps them to lead their competitors as well as to boost its own growth. It also helps them to handle any difficult situations during bad economic conditions or even recession.
On the other hand, bad management decisions can increase difficulties in the way of even a good running business organization.
Some of the bad decisions that can ruin a company include hiring unskilled staff, firing top performing managers, taking excessive debts, merging unprofitable businesses & many more.
If you find an organization taking unrealistic & bad decisions then it is better to sell its shares & stay away from it. It is due to the fact that sooner or later their actions will be reflected in stock price also.
Thus it is rightly said that good management decisions can turnaround a bad company while bad management decisions can ruin a good company.
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