Around 11 years back stocks of companies like Lanco Infra, Suzlon Energy and Unitech featured on the top in the list of most share recommendations. Today they are penny stocks which made huge losses for investors who invested in them on the basis of share recommendations.
Let’s take a look at current status of some stocks once considered as top share recommendations.
So you see it is very important to know the right time to exit a stock as much as the right time to enter a stock. Not knowing this can be disastrous. In short it simply means half knowledge is dangerous. The best example of this is the story of Abhimanyu from Mahabharat.
Abhimanyu, the son of Arjuna knew how to crack the Chakravyuha, an invincible formation as he had heard of it from his father while he was still in the womb of his mother. But he didn't know how to get out of it. This half knowledge proved disastrous for him resulting in his death.
Similarly when it comes to stock market, the right time to exit a stock is also important because over a period of time the company’s fundamentals may change. For example, underperformance quarter after quarter or declining sales or changes in customer’s preferences etc. Or simply the desired target price given in the share recommendations may have been achieved.
Exit At The Right Time Is Equally Important For All Share Recommendations
Gone are the times when one could just invest and forget and wealth creation happened passively like in the case of investors who invested in Wipro, Asian Paints, Infosys, Eicher Motors and MRF in the initial stages. Today things can change overnight, so invest and forget approach is no longer relevant.
At times you also need to exit a stock if there are better share recommendations to invest with better fundamentals and better performance. Don’t forget markets and returns are all about timing. Best returns are achieved when you manage your investments on a real time basis with proper timing of entry and exit. And always remember that you make profits only when you sell at the right time and the right price.