Selling shares: a difficult choice

There is a precise reason why selling the shares they have in portfolio is more difficult than buying them. In fact, on average, investors are much more hesitant to liquidate a position than to open one. Usually the temptation to sell becomes stronger during a market downturn. On the contrary, when things are going well, greed prevails over fear, so investors keep stocks to improve the trend of prices to grow. When things go wrong, investors with deranged portfolios and take place on the wrong basis panic.

In short, they face an unsecured eventuality. So, finding themselves faced with a loss, they rush to sell, consolidating an often important economic damage. INVESTO, independent and authoritative financial information There are four cases in which the sale of shares makes a rational sense and is favorable to the investor.

When to sell stocks: 4 rational cases

The specific goal achieved You invest for a reason. One of these, for example, could be the creation of capital for a well-defined future purpose. When, thanks to the performance of the markets, the objective is achieved, it will be necessary to liquidate all the shares and bonds and to remain "liquid". I mean that if a person wants to reach a capital of € 100,000 to buy a house, when he reaches the sum he would have to demobilize everything.

Continuing to invest would mean exposing yourself to unnecessary risks. Since the goal has already been reached, the danger consists in a sudden drop that temporarily burns part of the sum, so the most rational choice is to freeze and stand still. Even if the market continues to rise. Life needs have changed

An investment portfolio is built on the basis of certain assumptions that affect people's private lives. If these change, for any reason, it makes sense to remodel the composition of the portfolio itself. As an example, a person who changes jobs, moving from an "employee" to an "independent" position, may decide to move to a more prudent approach to avoid an aggravation of the overall family risk.

The portfolio must be rebalanced Those who follow a contrarian approach, like some of the students at A Scuola di Investimenti, will have to sell shares on the occasion of periodic portfolio rebalancing. This is a particularly effective form of optimization, as it allows you to buy low and sell high. Ultimately the exact opposite of what unwitting investors do. Short time horizon Anyone with a time horizon of less than 4 years should not invest in stocks. Those who, on the contrary, have a multi-year perspective will do well to increase the share of shares they have in their portfolio.

Over time, however, it is appropriate to review the investment choices made. In this way, the equity percentage will have to drop as the investment maturity approaches.