When can we sell stocks

Extrinsic Reasons to Sell

Financial reasons: This can include any number of reasons pertaining to the investor’s finances. For instance, a stock may have gained so much in proportion to the rest of the portfolio (as in the example of the biotech stock mentioned earlier) that the investor may need to rebalance it to bring it back in balance. Or the investor might wish to sell a stock to book a loss for tax purposes. Another reason to sell a stock could be because the investor needs cash to deploy in a competing investment, such as real estate. Such financial reasons are pretty potent ones to justify selling a stock.

Lifestyle reasons: Lifestyle changes also present good reasons for selling a stock. Younger investors might consider selling all or part of their portfolio to make a down payment on a house or buy a car. Investors nearing retirement might sell stocks to wind down the equity part of their portfolios and reduce their risk exposure. Parents may also sell stocks in tax-advantaged plans earmarked for specific purposes such as their children’s education.

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