7 Red Flags That Say It's Time to Sell

Few investors have an unlimited supply of money to keep buying new stocks. So to maintain a healthy dose of cash for the next stock purchase, most investors need to keep an eye out for opportunities to sell existing holdings -- ideally with a nice gain.

In some instances, you'll have a clear sense of what a stock is worth, and you can simply sell your investment when shares have risen to your target price. But in most instances, no clear-cut exit exists.
When that's the case, keep holding your shares as long as business is going well. Just keep watching for these seven red flags, which may signal it's time to sell.

 

1. Watch the insiders. From time to time, an officer or a director at a company may look to sell shares -- especially if the stock has steadily risen in recent weeks. That's perfectly understandable. But when several of them do so at the same time, you should probably follow their lead.  If insiders don't think the stock holds value anymore, why should you?

History shows that stocks heavily purchased by corporate insiders outperform the broader market averages by roughly 2-to-1. To learn more about this and other market timing techniques, read "How to Excel at Timing the Market."  (more)

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