Should You Sell on Good News?
August 28th, 2007
Should You Sell on Good News?
To wait for a little confirmation through increased price and volume in a stock is one thing; to wait final confirmation in the form of news announcement is quite another.
You are more likely to lose money if you insist on not buying until good news is officially confirmed. That’s why the Wall Street adage says “Sell on good news.”
Why do professionals sell on good news? Because, in the words of William A. Doyle of the highly popular The Daily Investor, “many other people (mostly non-professional) will jump in to buy the stock on the good news and they will sell out at a good price.”
“Also,” continues Mr. Doyle, “good news often leaks out and gets around before it is formally announced. If the people who have advance knowledge of the news do a lot of buying, that will often send the price of the stock up. Then, if they and others sell when the good news is official, the price of the stock may dip.”