When Is It Advisable to Sell at a Loss?

In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who asks: "Is it ever advisable to sell at a loss and how do you know if its time to do that? Obviously if a company is no longer in business then you should probably sell, but if the stock price just isn't recovering, is it OK to sell at a loss?"

Most investors are always focused on what stocks to buy. However, perhaps the most difficult decision is when to actually sell. Whether the investment is a successful one or not, selling is not always so easy. The key for investors is to focus on the actual business itself and determine whether the business still has a clear path forward with solid leadership and a competitive advantage that will help it grow. If the reasons you invested in a company to begin with are no longer there, then selling may be the right thing to do. However, Jason also believes that it can be beneficial for investors to hold on to tiny portions of their biggest losers, as these can serve as powerful lessons that won't be so easily forgotten, given that they're still in your portfolio.

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  • Report this Comment On April 08, 2014, at 3:31 AM, Interventizio wrote:

    Selling remains the most difficult part of investing. Sell when an important point of the stock checklist is going missing.

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Jason Moser

Jason A. Moser is an analyst for Motley Fool One. He finds stocks that make money and tells the world about them. He's also won a Buzzy. And an Awessie.

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