Underperforming assets: when to sell them?

Hello! Deciding when to sell an underperforming asset can indeed be challenging. Here are a few considerations that might help you make a decision:

1. Re-evaluate the Fundamentals: Sometimes, an asset underperforms because the fundamental reasons for its initial purchase have changed. This could be due to shifts in the company’s financial health, changes in management, or evolving industry dynamics. Re-assessing the fundamentals can help you decide whether the asset still has potential to recover.

2. Compare with Benchmarks: Look at how the asset is performing compared to similar investments or relevant benchmarks. If your asset is consistently underperforming compared to its peers, it might be time to consider selling.

3. Consider the Impact on Your Portfolio: Analyze how this asset fits within your broader investment strategy. If it’s causing significant drag on your overall portfolio performance and doesn’t align with your investment goals, selling might be a wise choice.

4. Tax Implications: Sometimes, selling an underperforming asset can have tax advantages, such as using capital losses to offset capital gains. However, tax considerations should not be the sole reason for selling an investment.

5. Emotional Attachment: Investors sometimes hold onto assets for emotional reasons, such as loyalty to a brand or nostalgia. It’s important to make investment decisions based on rational analysis rather than emotional attachment.

6. Market Conditions: Broader market conditions can also influence the decision to sell. In a declining market, it might be worthwhile to hold and wait for a recovery, especially if the fundamentals remain strong.

When using Pearler, you can track the performance of your investments and compare them against benchmarks directly through the platform. This can provide a clearer picture of

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Hi Liam,

I wrote an article on deciding how + when to sell investments which you might find helpful: https://pearler.com/explore/learn/blog/should...

All the best.