When to Give Up on a Stock

Selling should have little to do with price. What matters is the business itself and whether it has changed for the worse.

A clock that literally says "time to sell"
(Image credit: Getty Images)

Buying stocks is much easier than selling them. When you decide to purchase shares, you usually act with enthusiasm.

But selling is drenched in ambivalence. Many in­vestors just aren’t sure whether it’s the right time. The psychology can be perverse. Selling a stock in March at a 40% profit and then watching the price double by September can feel worse than selling it and watching the company go bankrupt – even though in both cases, your gain is the same.

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Disclaimer

James K. Glassman chairs Glassman Advisory, a public-affairs consulting firm. He does not write about his clients. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. Of the securities mentioned in this column, he owns Lululemon Athletica, New York Times and Diamonds.

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.