By Taurean J. Washington | Geezeo Group “Combat Investors”
Many experts and advisors offer great advice on which companies are worth investing in and which are not. For me, they leave out the two most important details. At what price should I buy? At what price should I sell? Absolutely any public company or corporation is a great investment given those important details.
souldestine@cox.net
At what price should I buy?
A great company is only a great buy when it is on sale. If I purchase shares when the emotions of the market have driven prices unrealistically high, I may have bought lumps of Christmas Coal instead of a rain check to a great retirement or vacation. Hypothetically: If Burger King (NYSE: BKC) is worth $38 a share, it’s a good buy for me when the trading price falls around the $32 range.
Buying on sale also helps make your calculations and ratios more attractive. When hunting for a minimum annual dividend of 8% or more, you may miss some excellent opportunities when discarding organizations that are paying 4% based on today’s trading price. That same 4% easily recalculates at 8% or more when shares are on sale.
At what price should I sell?
When you finally find the right company on sale for the right price, when should you sell? Knowing when to sell your shares is arguably the most important piece of intelligence when investing. Buying at a great price is only useful when you sell at an equally attractive price. Letting prices fall too far south can be just as damaging as refusing to sell when prices soar too far north.
Some industries are known for requiring a great deal more stomach and flexibility than others. In the past the technology sector flexed enormously and consumer staples required very few antacid tablets. Should I sell to realize a loss at 10% or should I weather longer? Should I sell when prices of Burger King have reached $50 three months from now or should I hold out for more?
When you find a company you like, give your research time and it could pay a different sort of dividend that we can all live with. Sometimes the best “sell” strategy is to “hold”.
How do you chose your stocks? When do you decide to sell? Join the conversation here at Geezeo and share the wealth.
Related:
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Four Smart Ways to Invest Tiny Sums
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