When investors ask us about our conservative investing strategy, they often wonder when they should dump a weak stock from their portfolio and replace it with something new.

Knowing when to sell is part of our conservative investing strategy that we cover in our new special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.

Look beyond price in deciding when to sell

The short answer is that there is no simple formula for deciding when to sell a weak performer, regardless of whether you follow an aggressive or a conservative investing strategy. But there are some helpful guidelines.

First, you’re never going to sell at the top or buy at the bottom. That’s why we’re so selective about the stocks we recommend in our newsletters. The better the quality of the investments you buy, the less you have to lose by failing to sell.

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In fact, regardless of whether you practice aggressive or conservative investing, the quality of your investments matters much more than your skill at selling.

Second, you should be quicker to sell aggressive stocks than conservative investing picks. With stocks we rate as “Speculative” or “Start-up,” it pays to apply our sell-half rule. That’s when you sell half of a stock that doubles in price.

Our conservative investing strategy will steer you away from short-term trading strategies

Many investors mistakenly assume that frequent profit-taking is the key to long-term success. Few brokers disagree, since they make money every time you buy or sell. But in the long run, taking profits simply because profits are available is going to cost you money. That’s because of the way the stock market works.

Stock prices rise 10% to 12% a year over long periods, on average, but individual cases and years vary widely. Even good stocks sometimes go sideways for decades, while others turn out to be “ten-baggers,” with gains of 1,000%. To make serious profits, you need to hang on to your best performers for years. If you are too quick to sell stocks that have gone up, you may avoid some 20% setbacks, but you’ll also miss out on some 200% gains.

As a member of TSI Network, you may have already seen Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada. If you haven’t yet read this new free report, click here to download your copy today. I’d also encourage you to share the report with a friend. It’s my “thank you” just for signing up for my free daily updates.