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After reading the book “The Five Rules for Successful Stock Investing”, one of the lesson it taught me is that only sell a stock when it met certain criteria. Basically, a stock should be hold for an eternity if possible, because many decisions have been made before buying this stock, and you think that this stock has more potential than its other peers.

No doubt that stock price fluctuates everyday due to the investors selling and buying, but price alone shall not determine the stock’s quality, whether it goes up or down. Furthermore, sometimes you sold a stock at a relatively low price, and the stock suddenly skyrocketed, to a point that you are unable to buy back the stock.

Hence, always hold a stock unless it met the following criteria:

在笔者读过了 “股市真规则“ 这本书后,领略到的其中一个真谛就是只在一个股有了以下的情况时才将它卖出。照理说我们应该长期地持有一只股,毕竟我们已经将它彻彻底底地了解,并决定它是在同行中最杰出的那个。


Mistake (差错)

Think about the time when you are evaluating the company you are currently holding, have you made a mistake on it? Over-confident on this stock or wrong judgement? Only sell when you are sure that mistakes were made when you complete your evaluation.



Deteriorated fundamental (被改变的基本面)

When a company’s fundamental has changes, whether from profit to loss, or completely change of business model that gone the other way, you shall sell as foreseeable future becomes uncertain.


Overvalue (被高估)

No matter what stock you bought, it should not be worth millions. There should be an intrinsic value or reasonable price for this particular stock. Hence, one should sell their stock if their current price is exceeding the fair value by miles.


Other uses of money (更好用钱的地方)

Normally when we sell a stock, we will get the money back. However, if there is no better use for the money, why bother cashing out where you can only hold the cash but do nothing. It is better to leave it in the market, allowing to earn both income gain and capital gain.


Too much money on one stock (太过集中于一个股)

Sometimes when you are interested in a stock, you will invest most of your money in that stock, but that is in fact unhealthy because the price fluctuation may cause massive paper loss to your portfolio. Hence, if there is a stock that hold more than 15% of your portfolio, then there is potential to convert some into cash or into other stocks.


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