Investing in stocks is a great way to grow your money. However, it’s important to remember that there are times when it’s best to sell certain stocks. Stocks that have been consistently underperforming compared to others, or those that are no longer performing well based on past performance, are stocks to consider selling. It’s also wise to research the market and industry trends before deciding whether or not to sell a particular stock. Staying up-to-date with current events and researching each pick before investing can save you from losses.
Still, selling stocks can be a tricky business. Knowing which stocks to sell and when can make the difference between a successful investment strategy and one that fails miserably.
Stocks have felt the ramifications of the pandemic and the uncertainty Covid-19 has produced in all markets. Investors are cautious about selling their stocks, scared that what goes down may not return. However, many prominent investors have been strategically selling off certain stocks since the beginning of the year to take advantage of a lull in the market. Although this is an unpopular decision for those seeking security and stability, selling stocks early on may benefit those who can stomach risks as the stock market navigates this downward spiral.
Here are three options if you are also looking for stocks to sell:
SoFi Technologies (SOFI)
Many investors consider the fintech lender SoFi Technologies (NASDAQ:SOFI) a potential stock option. However, there are three major reasons why SOFI stock is not an ideal choice.
Firstly, shares have been roaring since the start of 2023, up more than 20% so far this year. During bear markets, it’s best not to overpay for stocks. Plenty of quality options are available at a discount, allowing savvy investors to take advantage of the situation.
Secondly, one of SoFi’s main sources of business is the student loan portfolio. Last year, SoFi experienced disappointment when President Joe Biden’s administration extended the moratorium on student loan payments until June 2023. This development has detrimentally impacted the financial performance of fintech lenders and serves as a reminder to plan for unforeseen circumstances in business operations.
In addition, SoFi’s foray into the world of crypto trading has provided it with an important competitive edge. But now that digital currencies have suffered a sharp decline, this could result in customers deserting the company for more traditional banking counterparts.
Riot Platforms (RIOT)
With the collapse of Bitcoin (BTC-USD) prices, miners like Riot Platforms (NASDAQ:RIOT) have seen a decrease in stock values, making RIOT stock one of many stocks to sell. Unfortunately, it isn’t just those invested in crypto mining that should be wary, either. Many crypto exchanges have been forced into bankruptcy — most notably FTX — and some are blocking withdrawals. The price and volatility of cryptos are proving too much for some to handle.
The past few weeks have been challenging for RIOT, a public stock linked to BTC prices. After experiencing extraordinary growth in 2020, the decline in price of BTC has taken its toll on RIOT. However, the company may be turning a corner soon. Recently, Riot gave some operational updates that signal a positive outlook.
The company’s recent change of name from Riot Blockchain to Riot Platforms — reflecting its diversified product offerings — has been seen as a major step for the company. This indicates that Riot is committed to data center hosting and electrical equipment engineering. The strategic change shows an acute awareness of the market. Bitcoin prices have declined for several months, leaving many companies that participated in digital currencies scrambling for alternative investments.
That said, a further upward movement in shares will still be contingent upon an increase in the value of BTC. Although we have seen some positive movement in the last few days, no one can say when the prolonged slump in cryptos will end.
Source: rblfmr / Shutterstock.com
Although Wall Street pros may be bearish on the godfather of meme stocks, there could still be an opportunity for investors who know when to buy and sell. Stocks on a downward trend can represent potential buying opportunities. However, investing in GameStop (NYSE:GME) stock does come with its challenges.
Stocks to sell can sometimes be difficult to identify when they become divorced from reality. This kind of situation began occurring in 2021 with GME stock, when it increased by more than 1,700% over a few weeks. This makes it almost impossible to rely on fundamental research when it comes to GameStop.
Nevertheless, there needs to be a way to assess stocks over time to make informed decisions. By most measures, GME is highly overvalued. GameStop’s exploration of NFTs and cryptocurrency could be highly rewarding. But all of this is speculation.
Since the start of the year, GameStop shares have soared more than 20%. While substantial gains in GME stock have built investor enthusiasm, there is growing doubt that these gains will be sustained. After all, the impressive rise hasn’t been anchored by any fundamental strength seen in the company’s financials or operations. Instead, ongoing investor speculation has pushed GME higher, leading those mindful of its underlying fundamentals to remain cautious.
Whether the upward momentum here will continue is uncertain. For those looking to sell some stocks, now’s the time to trim your position in GME.
On the publication date, Faizan Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.