Selling a loser is often harder than selling a winner. If you purchase a stock with a certain expectation, but the company never lives up to your expectations, you should sell. The following list provides a few examples of such situations:

• You may want to consider selling a stock if it declines 20 percent in a down market and 10 percent in an up market. If a stock drops 15 percent in a flat market, reevaluate.
• The company’s growth rate and earnings trends peak and then fall.
• The company cuts its dividend or stops dividend payments entirely.

If you sell a loser, note exactly why it didn’t turn out as expected and include these notes in your investment plan. Such documentation helps you avoid making similar mistakes in the future.

Everyone expects strong performers to keep up the pace. Past performance, however, doesn’t guarantee future performance. For more information, see the article “Do Past Winners Repeat?” at the Investor Home Web site.