When should you sell shares?

Since I started investing in shares in a serious way a few years ago I have bought and held virtually all my shares. I made the odd disposal, for example SnapChat at a considerable profit, but I was wondering about what factors should influence my decision to sell my shares, if selling was advisable at all.

So, I sought out and learned this valuable information yesterday.

The first, and vitally important thing I learned, was you should not let the price of the share determine your decision for you. Whether a share cost €1 or €5 and whether you are currently showing a book profit or loss is immaterial.

Because the share is either a good long term investment or not. How much you paid in the past, and how the market values it now, should not force your hand to sell.

The important question, and the most important reason why you should sell a share, is whether you can replace that share, if you sold it, with a better share.

Obviously, this decision requires analysis and sound judgment and you will not get the decision right all the time. This is inevitable. But the guiding principle in the decision to sell is whether you have identified a better share to replace it.

This policy will require an ongoing active review of what is available, how existing companies in which you hold shares are performing, and more research and reading.

But if you can constantly incrementally improve your share portfolio you will generate a significantly better return over time, having regard for the benefits of compounding returns.

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