asset plays

Hello friends, in today’s article we see chapter 17 of one up on wall street book. in chapter 17 you get some idea about the best time to buy and sell. After reading this article you know the best time to buy a stock and sell at the right time. so let’s see chapter 17 of one up on wall street book.

Previous Chapter 16

The Best Time to Buy and Sell Stock:

When to Buy:-The Best time to Buy and Sell Stock

In this situation, you have to buy in two important times, they are as follows.

1. End-of-year tax selling to carry forward losses: During this time some people sell stock that has to lose and save tax or carry forward and buy again that stock.
2. During market collapses and drop(recession): In this people are get panic and everyone wants to escape from the market and they believe that this is the end of their capital. So this time the value investor take the advantage of him and get into the market.

When not to Sell:-

1. don’t sell because a stock is doubled its price.
2. The macroeconomic issue like The money supply increasing or decreasing, the dollar appreciating or depreciating, or whatever happens with the economy. You have to hold until the fundamental of the company is strong.
3. If you think, you have to sell, then you have to ask yourself why are you buying and what is the main reason for you to buying.

When to sell:-

So the author gives us so many different categories, between which we have to remember some point from each and every category.

1. Slow growers: In the slow growers’ category, you can sell this stock when you get a 30 to 50% return on investment or If the fundamental of the company is weak. If the company loses market share from the previous one or two years and does maximum diversification and they don’t have any new product, from this situation you can sell the stock. When you buy this stock the company has more cash and negligible debt, but now the company taking lots of debt in reason of expansion, and the dividend yield is not so high, in this situation sell the stock in the slow grower category.
2. Stalwarts: In this category, you have to see the P/E ratio, if the P/E ratio is high than normal then you have to wait for coming normal by falling P/E and then buy again. In this category, you can sell a stock when the company’s major division is given less than 25% earnings of the company and they have a problem with earning growth. So in the future, no cost-cutting happen in that major division. the company launched a new product they are failing and lastly the P/E ratio is high than the industry’s ratio.
3. Cyclical: In this category, you can sell when you see this problem, the cost is increasing, the existing plant is working at full capacity and the company spends more money on the new plant. Inventories are increasing and competition in the company is increasing also union contract is an end to expire and demand is minimum and lastly, capital expenditure is doubled. If the above situation is there, then you can sell the stock.
4. Fast growers: In this category, you have to see some point that looks like a problem in the company, they are as follows, you can see earnings decrease or the company stop to develop a new product. the customer doing more complaints and their complaints increasing continuously. Institutional investors buy a 60% stake in the company, then in this situation, you can sell the stock. or you can see if the company have the maximum publicity and everyone saying buying suggestion. The company P/E ratio is maximum than the growth rate, and the PEG ratio is more than 1.5 and also the company staff management exists from the company and joins other companies. company product sales decreased in the previous quarter and the new product result is poor if you see a company showroom in every mall then the company does not have any space to spread and increase sales.
5. Turnaround: In this category, you have to see this point If a company operates another company, but they have different industries. And the P/E ratio is maximum than the growth rate and increases in inventories as compared to the sale percentage. The company taking more dept and the dept is increasing as compared to the asset it is very hard to get the sale from the previous customer, then this condition is happening, then you have to sell this stock to another company.
6. Asset plays:  in this category, your whole game is on the hidden asset value, so you have to see this point, Debt is increased or a 10% stake in the company is increased to 60% then sell that stock.

the above-mentioned point helps you to identify the stock in which category and you have very much benefit from this information to selling the stock.

So this is some point you have to consider while selling the stock. So don’t sell the stock seeing the one or two-point that above mentioned the probability of point is high then you sell the stock.

So this all depends on you. So no one tells the right time to sell, so everyone says the right time to buy the stock and it’s easy to know the right time to buy.