When i buy a stock or share i'm the one who decides when to sell it back, right?

Question

Can i hold onto it for few months or years? i don't understand how can people lose money when they invest in stocks in a good company. Why they just don't wait until the stock value appreciates again? (in case it has depreciated after they bought the stocks).

Answer 1

Sometimes it is advisable to take a loss rather than sit tight.  Suppose you have another stock in which you have a high realized capital gain on which you will have to pay taxes at year end.  By selling your looser you can offset that gain and not have to pay any taxes.  

Sometimes people pay too much for stock in a particular company and it may never ever return to that price again in their life time even for stock in a good company. This happened in 1999 when people were paying absolutely ridiculous prices for Intel, Cisco, Texas Instruments, and many others.  

Answer 2

Yes, you can hold it for as long as you want unless its a compulsory buy back. Sometimes when a stock price has fallen its beneficial to sell now, rather than later. The reason for that being is that the stock price could fall further, which could be due to bad news reports, bad fundamentals, surging complementary prices etc. Is it safe to catch a falling knife?

Answer 3

Yes. Once you have paid for it then you can keep it forever. Why should you? It's all about returns. The return on your investment should increase over the years you hold it. Suppose you buy into a growth company at the early stage. As the growth slows down over the years you would probably want to sell and buy the next growth company. A quick example would be IBM. Look back over the years and see why you wouldn't have been wise to have held a once super stock like IBM up to today.  

Answer 4

Generally yes, you can hold for as long as you want. Unless someone wants to take the company private. In a compulsory buy back, you have to sell the shares.

Sometimes it's better to sell even though the stocks prices have fallen. Maybe because there has been changes in the fundamentals, business conditions or prospects of the company and the company is not attractive anymore in the long-term. Maybe a stronger competitor, or a new product has come into the market, making your company or products no longer attractive. This will have an impact on your sales, and your profit, and ultimately your stock price.