Two good times to sell a stock are when the company's value no longer justifies the stock price and when there is rapid price appreciation due to investors purchasing large blocks of shares, explains Investopedia. However, buying at the right time is as important as selling at the right time.
Successful investors know when to sell stocks based on the value of the underlying companies, according to James K. Glassman for Kiplinger. They sell when the thing that makes a company great no longer applies. A company falling out of favor with a consumer or having a market capitalization that exceeds other companies within its industry can be an indication the company is no longer great. However, all investing is subjective, and there is no universal rule that tells investors when to sell.
Most advice given by professional traders focuses on the buy side of any transaction, states Glassman. New investors who need advice on when to sell usually figure it out on their own. However, many professional traders state that investors should buy stocks for the long-term and sell stocks for occasional reasons. Reasons to sell include bad management, the deterioration of a company and the softening of demand for a company’s products.