How to decide if it's time to sell a stock

The Ticker

October 08, 1997|By Julius Westheimer

WHY DO many people ask, "Should I buy such-and-such a stock?" but few investors ask, "Should I sell?"

"Americans are inherently optimistic," says Donald Cassidy, author of "It's When You Sell That Counts." He adds, "Buying is an optimistic decision, but selling represents closure and we resist it. With the proliferation of 401(k) retirement plans and mutual funds, investors must learn when to sell."

Selling pointers: Act as if you didn't own the stock. Then ask yourself if you would buy shares at today's price. If not, seriously consider selling.

Other reasons to sell: If a stock grows to over 20 percent of your total holdings, cut back, pay the capital gains tax and sell. Don't worry about capital gains taxes; worry about losses. In retirement programs there are no taxes.

Other "sell" signals: If the company's share of the market declines, competition increases, earnings falter, dividends drop, etc.

CONTEST LEADERS: At the three-quarter pole, Sept. 30, with the Dow Jones industrial average closing at 7,945.26, here are closest forecasters for year-end Dow:

Four readers are tied for first at 7,948 -- Jack Michael, Sykesville; Nancy Ihrie, Timonium; Garry Bolan, Kingsville; and John Roche, Towson.

Next closest, in order: Allan Culver, Baltimore; Rosalie Gugerty, Timonium; Steve Pomponi, Abingdon; William Wheeler, Severna Park; Karl Kudlich, Cockeysville; Louis Matarazzo, Baltimore, Melanie Cook, Baltimore and Theresa Antiporowich, Baltimore.

Winners enjoy dinner for two with Mr. and Mrs. Ticker at the winners' favorite area restaurants; runners-up, ditto for lunch. Next 10 receive hardback books about money. We received a record 2,200 postcards. When the contest opened in mid-January, the Dow stood at 6,750.

Three months to go!

OCTOBER ALMANAC: "Curse of October 1929, was receding -- then came 1987 and a 602-point loss. Memory of back-to-back 'massacres' in 1978 and 1979, a 'meltdown' in 1987 and Friday the 13th in 1989 could affect bulls' spirits in forthcoming Octobers." (1997 Stock Trader's Almanac)

QUICKIES: "Provident Bankshares, Md." is listed under "100 Fastest-Growing Companies" in Research magazine, September

"Top-performing newsletters for past 10 years: In order, OTC Insight, MPT Review, New Issues, BI Research, Prudent Speculator." (Hulbert Financial Digest)

"The bull market has suddenly become over-believed. Remember: When things can't get better, they can only get worse." (Wellington Letter)

"There will be bumps along the way to new highs, but we expect new peaks for stocks and new lows for Treasury yields." (First Albany Newsletter)

Pub Date: 10/08/97

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