When to Sell

One of the more difficult decisions investors may make is deciding when to sell.

Each investor has their own objectives.

Some simply buy and hold. Others are active and use technical anualysis for shorter term moves in the financial markets.

Many family and small business clients often use various strategies to achieve their goals.

Here's an update on the recent market activities. the financials came through for a short term

rally as suggested in our January 5, 2021 emailed market piece from Qwoteds Qwick Takes

Qwick Takes: What will the stimulus package mean for the U.S. economy?


Stephen Akin, Registered Investment Advisor at Akin Investments: The extension of the PPP will help those small businesses that have managed to survive to this point. The financials will benefit from this reinforced funding for the PPP. It is interesting that the financials have firmed up a bit in the market. It would be a positive if that sector would finally begin to lead as the market works higher.”

In followup, the financials have been quite positive leading into earnings this week. Some have out performed nicely. Perhaps the sector is going to consolidate for awhile now as some of the earnings reports were a bit lackluster.

Market Technicals remain positive although they are quite extended. One should remember that markets can be overextended for quite sometime.

“the markets can remain irrational longer than you can remain solvent”

John Maynard Keynes

The Dreaded Margin Call (forced selling)

In an interview for nerd wallet I said the following: During a rising market it’s tempting for someone who has had big gains in their stock portfolio to begin withdrawing funds. Most brokerage statements or online sites will show an amount available for immediate withdrawal. What clients fail to understand is that may be a result of margining their stock holdings. If they continue to make withdrawals in that fashion they will continually increase the margin debt against the holdings. This is akin to refinancing your home mortgage and getting cash out.

When the market turns and the values begin to fall the margin clerks go to work. When they hit the parameters of the 4210 FINRA Rule (see attached file). They will send you a margin call. If you fail to meet the margin call an extension may be granted. Ultimately you will be sold out or a portion of your shares will be sold to meet the minimum margin requirement. Ironically, that often makes at least a temporary bottom in the shares. Unfortunately, if you did not meet the call you most likely received a greatly reduced price for your shares.

Attached is a link to the full FINRA Rule and some of the upcoming changes. My advice is to tread lightly where margin is concerned. It is wonderful in an upward market trend but it can turn against you quickly. It may become complex and leave the investor with regret.

Other alternatives to selling may be gifts to your favorite charities.

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