Now, one book that changed the way I think about selling a stock was by Phillip Fisher: Common Stocks and Uncommon Profits. It was one of my favourite books when I started investing.

He taught me 3 golden rules on when to sell a stock. And this forever changed the way I looked at “selling”.

Here’s when I’d sell my stock (and hopefully it will help you too):

When a stock no longer meets my investment checklist. This means, the company keeps reporting falling revenues, profits and its competitive moat is disrupted. Typically, you can tell this from 1-2 financial quarters that something is wrong.

I made a mistake (misjudgment): when facts of a company are actually less favourable than I first thought. Sometimes, this could be my own error, where I might get “too excited” over a company’s products and services. Sometimes, I also get carried away by the CEO’s smooth-talk. Sell.

When I found better investing opportunities. Why? You see, investing is thinking about risk-rewards all the time. And different risk-reward conditions have serious implications on how we put our capital. Money follows a path of better opportunities.