Selling Stocks

1. When you buy a stock, set a target price that you expect it to reach within, say, a year. If it falls far short, unload it.
Also, if you bought a stock expecting favorable developments that then do not occur within a reasonable time, dump your shares. And if the expected does happen but the price of the stock does not move, purge that stock promptly.
So, Rule One is: Sell a stock that’s been a fundamental disappointment to you.

2. On the other hand, if the stock fully achieves your target price, or even exceeds it, consider selling off part of the shares.
Consequently, Rule Two is: Dump some -- but not all -- of a real winner. Our hapless Amazon investor should have sold some of his shares, but surely not all.

3. Also sell off at least part of your position if a stock rises so much that it throws your asset allocation out of kilter. If you want 30 percent of your portfolio to be in tech shares, but a couple of high-fliers have lifted that proportion to 50 percent, consider selling some of those tech shares.
Thus, Rule Three is: Trim down on stocks in your portfolio that have spurted or slumped so much that they have mucked up your asset allocation.