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Takeover news. When one of your stock holding is getting bought by other companies, it may be time to sell. Sure, you might like the acquiring company but you still need to figure out the fair value of the common stock of the acquiring company. I probably wouldn't.

Other Investment Opportunity. Let's say you bought stock A and it has risen to 10% below its fair value.

During your investing career, you will do these two transactions; and selling. consumerism requires knowing the fair value of a stock and then view together it with recent price. If recent stock price is 10% beneath fair value and an investor does not mind getting a 10% return, then he should buy the stock. If not, he can then move on to other stocks.

Selling, however is not that simple. Sometimes, investment do not go the way you want it to be. Your prediction may not be accurate. Furthermore, your time frame may be longer than you expected. Here are ten different reasons investors might sell a pitiful stock:

Need the money. This generally happens due to improper planning. However, things happen. Even the most thriftily planned strategy may not work. disastrous events such as Hurricane Katrina or Rita may force investors to sell an investment if his household is high-flowing by it.

The book is unclean. When management left their post curtly or when the Securities of Exchange accredit (SEC) conduct a criminal investigation on a company, it may be time to sell. Your presumption may be inaccurate as a lot of fair value heed is based on the company's stump sheet, cash flow or other financial statement published by management.

Takeover news. When one of your stock holding is getting store by other companies, it may be time to sell. Sure, you might like the acquisitive business establishment but you still need to figure out the fair value of the sub stock of the grasping company. If the acquisitive crony is overvalued, then it is best to sell. A good example would be the purchase of Time Warner by American Online (AOL) in 2000. At the time, AOL share price was way overvalued with Price Earning ratio of 100.

Taking Profits Off the Table. Your stock has risen 40% from your purchase price. Your fair value care indicates that the stock can rise 10% more. Should you sell? Sure. hindmost all, the goal of every investor is to make money. If you feel that you need to get something off the table, then by all means do it. I am not going to be naive and guess that you should wait for the stock price to rise 10% more. Remember that stock price goes up and down and that fair value hedging has some degree of uncertainty. Would you risk your 40% gain for an cumulative 10% return? I probably wouldn't.

Other Investment Opportunity. Let's say you mercenary stock A and it has risen to 10% down south its fair value. Meanwhile, you had watched stock B fallen to downward 50% of your reasoned fair value. This is an easy decision. Go Ahead! Sell your stock A and buy stock B. Our goal as an investor is to maximize our investment return. Sacrificing a 10% of return in order to earn a 50% return is a sensible way to do that.

Inaccurate Fair Value Calculation. Let's face it. People make mistakes. As investors, we sometimes made errors in our fair value calculation. There are factors that we might not take into census when researching a particular company. For example, Merck & Co Inc. will have a higher fair value if we dismiss the potential Vioxx liability that some say to be as high as $ 50 Billion. But doing further research, we know that Vioxx liability does exist.

New Competitors with upper Products. When new competitors sprung up, the participation that you hold might have to spend more money in order to fend off competition. Recent example include the emergence of pay-per flick by Google. If you are in the stage presence such as newspapers or tendon network, this new product by Google might hurt your profit margins and eventually the fair value of the stock.

Exodus of Talented Employees. Talent is an asset. Yet, it does not come to light on the company's cool head sheet. Companies that rely heavily on intellectual products need to keep their employees happy. They are prized assets. When employees defect, it will act the company's future earnings. Lower future earnings means lower fair value for the golf links stock. A recent example include several Microsoft key employees defecting to Google.

Not having a valid reason to Buy. When you don't know why you a particular stock, you won't know how much your potential return is or when you should sell it. This is the easiest way of losing money. When you have no valid reason to buy, you should sell immediately.

Stock Reaches Fair Value. This is the easiest part of the problem. Yes. We should sell when a stock reaches its fair value. It is the main reason why we chose to buy it on the first place.

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