From the course: Behavioral Finance Foundations
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Best practices in buying and selling
From the course: Behavioral Finance Foundations
Best practices in buying and selling
- [Narrator] There are a number of general best practices that you should follow when buying or selling a stock. To begin with, spend equal time thinking about which holdings you want to sell and which new candidates to buy. It's certainly important to sell your stock, and that's very, very difficult for most investors. But for everything you sell, you're going to have some cash left over and you're going to have to decide how to allocate that among new investments. So, spend some time being very careful and considerate about any trades that you're going to make. Don't over-trade. Number two, think carefully about taxes on holding decisions. The reality it, unless you have a big winner that's very close to becoming a longterm holding, never use taxes as a reason for not selling. Too many people rationalize and say they're avoiding the stress of making a sell decision because they want to hold for tax purposes. Don't…
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