We are constantly being barraged with information on what to buy and how to buy it, yet few are ever around to give us real advice on when to cease an investment, walk away, and count your winnings.  The good news is that there is an easy way for you to decide for yourself, with the following tell-tale signs.

Loss of a key member of the organisation

Think Steve Jobs leaving Apple; see it as positive or negative, his absence affected the organisation to the extent that some investors reconsidered their investment.  Such a change however is usually only relevant when a key employee such as the chief executive officer, quits with little to no notice. Even if ample time had been given by the respective figure head, one might still be sceptical, as the company might stray from its overall aims and objectives, change plans and/or alter standards.   

Consistently missing estimates

Every company goes through tough times, so when a firm misses earnings estimates in any one quarter, it isn't necessarily something to worry about, but when a company misses earnings estimates in two consecutive or related quarters, investors should at least consider selling the stock and heading for greener pastures.  

Inventories are on the rise

Basic economics implies that if a company's inventories are rising at a faster rate than its sales, it may indicate that the company is having trouble selling its merchandise. The good news for investors is that a company's inventory levels are easy to check; via simply reviewing the company's last balance sheet. In doing so, investors should simply compare that number to last year's. If the inventory number is growing at a noticeably faster rate than sales, and the company isn't gearing up for its big selling season, it may mean trouble; unless of course there is a catalyst on the horizon, or some tangible proof that the company will improve its revenue and earnings within a reasonable time frame. If this is not the case, then consider selling the offending company's shares to protect yourself from future losses.

Knowing when to buy a stock is important, but knowing when to sell that stock is equally as important. Investors should be aware of the tell tale signs that are evident from the daily activities of an organisation; yet remain vigilant, taking into consideration that even the worst of situations may be less tragic than the headlines would have us believe, ergo persistence and patience are as always, a virtue.  

This article was issued by Steve Diacono, for Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.