When to Sell

# When to Sell

Selling a stock should be a rational portfolio decision, not an emotional reaction.

## Key Points
- **Only sell for three reasons:** You need the money, company fundamentals are deteriorating, or you can improve your portfolio
- **Don't let taxes drive decisions** - the tax tail shouldn't wag the investment dog
- **Focus on portfolio improvement** - selling should make your overall holdings stronger
- **Quality alone isn't enough** - even excellent companies can be poor investments at the wrong price

## The Basics

Many investors struggle with selling decisions, often holding stocks too long out of stubbornness or tax concerns. The key is approaching sell decisions with the same analytical rigor you use for buying.

There are exactly three valid reasons to sell a stock:

### 1. You Need the Money
Personal circumstances require cash: emergencies, major purchases, or life events. This is the simplest and most straightforward reason.

### 2. Company Fundamentals Are Deteriorating
The business is weakening. [Quality Ratings](/guide/core-concepts/quality-rating) are declining, earnings are becoming unpredictable, or competitive position is eroding. When your investment thesis breaks down, it's time to exit.

### 3. You Can Improve Your Portfolio
This is the most complex but important reason. Even quality companies can become poor investments when:
- [PAR (Projected Annual Return)](/guide/core-concepts/par) falls well below [MIPAR](/guide/core-concepts/mipar)
- Better opportunities exist in the [Sweet Spot](/guide/core-concepts/sweet-spot)
- Portfolio balance needs adjustment

## On the Platform

Use your [Dashboard](/guide/using-the-platform/dashboards) to identify selling candidates:

1. **Review PAR vs. MIPAR** - Look for holdings with PAR significantly below MIPAR
2. **Check Quality trends** - Monitor for declining Quality Ratings over time
3. **Compare opportunities** - Identify stocks in the Sweet Spot that could replace weak performers
4. **Calculate portfolio impact** - Ensure the sale improves overall portfolio PAR

![Portfolio Analysis](/images/guide/decisions/portfolio-analysis.png)

## What NOT to Consider

**Tax implications** shouldn't drive investment decisions. Focus on improving your portfolio's long-term performance rather than minimizing short-term tax consequences.

**Sentimental attachment** to "winners" can hurt performance. A stock that's been good to you may no longer be a good investment at current prices.

## Learn More

- [Portfolio Rebalancing](/guide/making-decisions/portfolio-design) - Learn when and how to adjust holdings
- [PAR Analysis](/guide/core-concepts/par) - Understand projected returns for better selling decisions
- [Quality vs. Return Trade-offs](/guide/making-decisions/when-to-buy) - Balance quality and expected returns