Portfolio Management | First Published November 23, 2020

Financial Decoder: Season 6 Episode 3

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When Should You Sell? Part 1: Stocks and Bonds

Successful investing is about what you buy and when you buy it, but also what you sell and when you sell it. So how do you decide which stocks and bonds to sell when?


The very first episode of Financial Decoder discussed the sell decision—in part because there are so many cognitive and emotional biases that come into play with that decision. Many people are prone to something called the disposition effect, which is the tendency to sell assets that have increased in value but hold on to investments that have dropped in value.

In part one of this special two-part episode, Mark Riepe analyzes the decision of when to sell an individual stock and an individual bond. First, Mark talks with Kathy Jones, Schwab’s chief fixed income strategist. They discuss whether or not you should sell a bond if it’s been downgraded, if you should sell before the bond’s maturity date, and how defaults and bankruptcies might affect your decision, among other topics. Next, Mark speaks with Steven P. Greiner. Steve is a senior vice president and head of Schwab Equity Ratings. Steve and Mark consider whether you should sell a stock based on changes in its fundamentals, such as P/E ratio and dividend yield, as well as how to react to bad news and big swings in the market.

Part two of this episode will examine the decision of when to sell a mutual fund and an exchange traded fund, or ETF.

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Financial Decoder is an original podcast from Charles Schwab.

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