Sell, reduce or hold

Understand the mechanism

A good company can become too expensive. A cheaper stock can deserve selling if its value fell faster. Distinguish ordinary volatility from a broken operating premise and valuation completion from deteriorating quality.

Personal tax and portfolio constraints need account-specific treatment rather than a universal classroom rule.

Walk through the process

Revisit the drivers that justified entry and classify what changed. Compare current value and risk with alternatives. Avoid waiting merely to return to entry, and avoid selling solely because the position shows a gain.

A decision should have a forward-looking reason.

Evidence and decision boundary

These are original fictional teaching figures, not a company screen. Actual analysis should use primary disclosures and distinguish management's explanation from your inference. Favorable or unfavorable evidence depends on the specific business, valuation and risk; no single ratio establishes a recommendation.

A worked example

A stock bought at fictional 30 with base value 40 now trades 48 while value is unchanged. The investment has profited, but the valuation case is weaker.

Alternatively it trades 24 after customer losses reduce base value to 20. The lower quote is not automatically attractive. The graph pairs each current price with its relevant revised value.

Check your understanding

Try the question before revealing its answer. These are reading checks, not trading certification or a site completion record.