Deciding when to sell is just as important as deciding which stocks to buy in the first place. The refusal to sell, whether it’s due to unrealistic expectations, stubbornness, lack of interest or mere inattention, is the undoing of many an investor.

As a long-term investor, you don’t want to cash in every time your stock moves up a few dollars. Commissions and taxes would cut into your gain and, besides, you’d have to decide where to put the proceeds. By the same token, you don’t want to bail out in a panic in the aftermath of a strong market decline.

Brokerage houses’ research departments are slow to issue sell signals unless a company faces serious problems. When analysts get uneasy about a stock, they often use phrases like “weak hold.” You should take that to mean, “Don’t buy any more shares and if you’ve got a profit, seriously consider selling.”

HOW TO TELL WHEN TO SELL.

Here are some clues that it is time to consider selling a profitable stock no matter what the analyst’s report says.

The fundamentals change. Whether you own a Fortune 500 company or a company most people have never heard of, you need to follow the corporation’s prospects, its earnings progression and its business success as reflected in market share, unit sales growth and profit margin. Annual reports, news stories, research updates from brokerage houses, and investment newsletters are fertile sources of such information, along with the references listed on pages 6 and 7.

If the company’s fundamentals start to weaken, it’s time to reconsider your investment. An example might be a fast-expanding retail chain whose sales per store, after rising for years, suddenly decline. Maybe the profit margin has slacked off after a series of consistent increases. These problems could signal that the business has peaked.

The dividend is cut. The progression and security of its dividend are important to any stock’s prospects. A dividend cut or signs that the dividend is “in trouble”—meaning that analysts or creditors are quoted as saying they don’t think the company can maintain its payout to shareholders—can undermine the stock price (Above).

You reach your target price. Many investors set specific price targets, both up and down, when they buy a stock; when the stock reaches the target, they sell. A good target is to double or triple your money, or to limit your patience with a stock to a loss of 20%. Such guidelines can prompt you to take your gains in a timely fashion and to dump losers before the damage gets too painful. You can take the simple step of setting a “mental protective stop.” Watch the stock listings and sell any stock that hits your mental stop point. You can set your sell level anywhere, perhaps arbitrarily choosing a price level that will double your money, for example. Once you’ve reached your objective, take the money. If the goals you set are very conservative, you might miss some gains from time to time, but that’s better than holding on too long and falling victim to the Wall Street maxim that says: “Bulls make money, bears make money, pigs get slaughtered.”