(EMAILWIRE.COM, September 08, 2010 )
Dallas, Tx - Investing is as much about selling at the right time as it is about buying at one. Experienced investors are good not only at buying a stock at an appropriate time but also at selling at an appropriate time. If you are a novice investor, then it is important for you to learn the art of selling.

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So how do you read a Sell Signal? There are times when even successful companies go through structural problems. You can notice this by the exit of a high number of staff, questions on company’s corporate governance, the lack of a clear succession plan at the senior management level. All these things indicate that the company may find it difficult to operate.

Another very good sell signal is when a huge number of insiders are selling their shares. Whenever insiders sell shares in a company, they have to make this material information public. So finding out about insider selling is not that difficult. Insider selling, in most cases, occurs when senior management is looking to book profit or lower their stakes. However, when there is mass selling from the senior management, it is a strong signal that people running the company are not very confident about its futures and expect a slide in share prices due to this.

Comparing financial ratios with similar companies is also a good way to find out if it’s the time to sell. One of these ratios is the Price to Earnings ratio. If a company is selling at a higher price to Earnings ratio than its competitors, and if this premium is not justified, it is possible that the markets have overvalued the stock and the price could fall anytime.

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The other way to decide is to track the company’s operational and financial performance. If the company is continuing to lose market share, if there has been a continuing decline in revenue, or the company’s expenses are increasing at a greater pace than its revenue, then there is a possibility that the company’s operations have become inefficient. This may result in further weakness and impact the stock negatively.

Reading the right sell signals can help you achieve great returns on your investment. It is not always that you will get it right, but if you follow some of these tips there is likelihood that you will be a successful investor in the long term.

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