When should you sell your stocks? Here are the five rules for when to sell your stocks.
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When should you sell your stocks in the stock market? That’s one of the most common questions I get. How do you know?
Selling can always be a stressful thing to do because ideally, if we did a good job buying a stock, the best time to sell – should be never. If you are going to be selling some of your stock whether that’s for some passive income, or if you’d like to save money to perhaps invest somewhere else, here are 5 great rules to stick to.
For reference, I’m using the Robinhood app, and I’m a dividend investor but this should apply no matter which type of investor you are. Please Note: this video is for entertainment purposes only and I will not be held responsible for any incurred losses.
Sell Rule #1, you might want to sell when the company long term “profitability” is not looking too good. They did a study analyzing stock returns between 1990 and 2010, and stocks with the highest trend in earnings growth, returned 11.5% per year, which is a LOT if you’re not sure – while the stocks with the lowest earnings growth, returned only 1.5% per year – which is pretty much less than inflation. Just for comparison, the top 500 companies in the US returned an average of 6.3% per year. So basically what that means is, companies that can grow their earnings over time will see the stock price obviously move higher.
Sell Rule #2 – selling when a stock has gotten excessively expensive. One good example right now is Tesla. The hype is at it’s peak, everyone screaming about Tesla and it’s worth more than GM and FORD combined. When that happens, it’s a good time to consider pulling back on the company and waiting until a more reasonable valuation and the price of the stock drops.
Sell Rule #3 – If the size of your position becomes overly large – you may consider selling. If you’re a dividend investor like me, you might notice one of your companies is responsible for a REALLY big portion of your income, and you don’t want to be in that situation. Because if the dividend gets cut, you lose a big part of that income, so you want keep them in moderation so they don’t represent an overly large percentage.
Another way to look at it is if the value of the stock itself has increased to more than 5% of your entire portfolio. Anything above 5% of your entire investment portfolio should be taken a look at and maybe leveled off and brought down below 5% because anything more than that – can become risky. 5% is not the definitive rule, it’s just what I’ve been comfortable with
Sell Rule #4 – sell when you have a better investment idea. This could be anything, it doesn’t even have to be another stock. It could be real estate, a bond, or your education. In the case of my stock portfolio, there are definitely companies in that are losing money that could be put to better use elsewhere in a company that’s perhaps more healthy, pays a safer dividend, or has a higher earnings growth. Fortunately for me, there are enough winning companies that offset any losses from my other investments that more than make up for it all.
Sell Rule #5 is probably the best and easiest way for us as dividend investors to keep track on when to sell a company. Obviously, the goal is to have our dividend income fund our lifestyle from all the passive income we collect, however – If a stock becomes dangerously close to cutting it’s dividend, it’s usually time to sell.
*Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.
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Looks at this after having 40% of my portfolio in one stock and my question was if I should sell high so I could but more low
👁️👄👁️
Great video, I subscribed.
SENS gained 122% last week , should I sell? Nah , I’m greedy 😂
You were right. This video didn’t age well. Bit coin 70k. Tesla skyrocketed.
There are a few men who are experts in stock trading Mr Marshall Raymond is one, his intriguing strategies cuts down losses.
These videos tend to be very reasonable but he's far to short sighted on Tesla as if it's all about cars
What about etf’s ? They usually have high P/E ratio
This was very helpful You should have been the popular kid–you are very likeable just being yourself. I especially needed to hear what you said about dividends. Thank you. My name icon may come up 2x. Apologies. Computer giltch we don't know how to fix.
you are funny…makes alot easier to watch these videos full of information
But…in order for your stocks to cover your expenses, don’t you have to sell them ?
Can you make a vid showing how to do the pie chart …..I think it would helpful thanks
Wow, I should have bought a little Bitcoin a year ago. 🥺
I literally watch your vids just to see your intros absolutely 🔥
Dude you’re spontaneous and refreshing as a teacher. I appreciate it, humble respect.
This was a good video, thanks!
Dudes, use indicators like RSI. It can show you overbought and oversold levels. You can choose 1D or 1W timeframes (for long-term investors). P.S. Sorry about my English, because I am russian.
You just need to sell stocks like this and like that…. Just tell me how to sell stocks
Good vid! How do we but you spreadsheet excel file?
Want me to tell you how to actually beat the stock market? Put your money in before wall street and pull out when they start investing.. stop chasing stocks that already ran up
Lots of fluff
This intro was fire indeed, had to like for the 1x
Thank you this video makes me feel better as a 1 time investor I thought maybe I was stupid because I could really predict when to buy or sell stock. Thanks.
When you can gain a profit and see it more work or risk to not walk away profitable now!
Hey bro I let your video commercial adds play all the way while I check my stocks… TAKE ME TO THE MOON!
Tesla’s P/E ratio rn is 1300
Can you do an on the screen tutorial?!
i like u ur funny but even funnier in 2x speed
Sell when dividend is cut.
Andrei, my friend built an algorithm that buys and sells his stocks for him. He programmed it to buy highly volatile stocks when they are slightly below their average price and immediately sell them at their relatively higher price. Totally not for me but what do you think?