Why do you make an investment? What are the reasons you decided to invest in a stock?
It is crucial you have a solid answer to these questions. If you know why you are buying, you also have identified why and when you should sell.
Let me give an example. Let’s say you decide to buy financial stocks when the economy is slow, short-term interest rates are declining or have stabilized after falling for several months, and financial risk is declining.
These are solid reasons why you should buy financial stocks. They also alert you when you should reduce your exposure to financial stocks. You have to consider selling financial stocks when the economy strengthens, short-term interest rates are rising, and financial risk deteriorates.
These reasons may not be perfect, but they guide you in establishing your investment strategy. In time, you will improve them and become more reliable.
More, much more on https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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