When Is The Right Time To Sell?


Pokemon Go has shed some new light on the pocket monsters that I once cared so much about. The cards that I collected are somewhere in storage, and I recently looked online to see how much some of my cards are selling for because of this new craze. Let’s just say, I could be a millionaire if I sold them. But if I hold on to them for another couple years will they be worth even more?

That is one of the big psychological battles that we play when we enter the financial market. Whether that is with selling your house, selling a stock or a bond, or even if you are trying to sell an old baseball card you found in your attic. The first instinct that people have when realizing that they have just made a lot of money by holding on to something is to sell it so that they can reap the reward of doing nothing.

But then we remember the inertia and momentum of time. If we hold onto *blank* then we can let inflation take its course and eventually the *blank* will be worth more. The problem sometimes with this thinking is that inflation is a general measure of all price increases throughout our country. And so it may reflect the overall trend, but it does not account for the individual items of value that may or may not be worth more in the future.

The largest factor in timing when to sell something is figuring out if there is a future value to that something. If we are talking about stocks, the right time to sell would be when we can reasonably estimate that the company doesn’t have greater earnings potential than the overall market. If we are talking about a trading card, the right time to sell might be when there is the most amount of enthusiasm for those trading cards. It is counter intuitive, but when there is the most amount of enthusiasm that means there has never been more, and thus it is more likely than not that the trading card’s enthusiasm is going to go down.

This starts down a dangerous street thinking about who and what are fads, and who and what are here to stay. But this helps us understand that basic questions of when the heck should I sell. People who have put their house up for sale can attest to the markets fickle nature. We may think that a certain neighborhood may have a lot of momentum, but as soon as we put our house on the market, that fad fizzles out and another one become more attractive.

There are many things in life that we are going to have to sell. Whether that is our own story in an interview, a house, a Pokemon card, or a stock, we have to think about the ramifications of the timing of that sell. The one thing that we can all try to remember is that there is a very wrong time to sell.

Looking at my Pokemon card example, the absolute worst time to sell my cards would be when and if the Pokemon phase ever ends. When prices of the cards that I hold start to drop and then hit a rock bottom, that would be the worst time to sell.

But when we look at stocks or mutual funds or other financial instruments, we often let fear dictate when we should sell. As a stock drops and keeps falling we fear that it may go all the way to zero and we could lose all of our money: a very rational fear. But most of the time our fear turns out to be just that: fear and not reality. Even stocks recovered from their terrible lows in 2008 to regain most of what people lost in the next few years.

So when we are thinking about selling something, let’s remember to not be motivated by our fears, or our hopes. But instead think about each sale as a way to cash in at the peak of excitement for that something. None of us can make perfect decisions about when to sell, so let’s not linger on our past decisions and instead let’s look forward to what we can do with all that money we just got from selling all our Pokemon cards.


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