Hi,
There are many factors to consider in coming to a decision to this question. At its core, I always like to circle back to the my investment thesis - in other words, why did I buy it in the first place? It helps to have a clear investment strategy goals, know your risk tolerance, etc to answer this question. If you just bought just 'because' which we've hear many times, you might have hard time answering that first question. That's ok.
There are other questions you can ask yourself:
- Has the investment thesis changes for the better (or worst)?
- If its changed for the worst - can it return to its previous thesis?
- Have my investment goals change?
- Does it still align with my strategy?
- Are there better opportunities?
The answers to these will influence my decision. Most often than not, if the investment thesis has not changed (or changed for the better), nor have my goals/strategy, etc. - then I will not sell. Only in a rare case would I sell something that fits all of the above for a better opportunity.
Likewise, I won't always hit the sell button if the investment thesis has changed for the worst. Perhaps, I'll keep it because it still fits my strategy, or because I don't currently see a better opportunity at that point in time. It is however, rare that I'll keep something in my portfolio in which the investment thesis has been negatively impacted and still fit my strategy. Why? Because when I analyze stocks for my own portfolio, they do tend to go hand-in-hand.
Another final point - I am an investor, not a trader - so I don't buy anything that I am not comfortable holding for the long-term. This is important because short term price movements (positive or negative) will have no impact on my decision unless those movements are a result of an event that changes the original investment thesis.
Hope this helps!
Mat