Singapore’s Straits Times Index (SGX: ^STI) crossed the 5,000 mark for the first time last week.
Buoyed by the bull run, JP Morgan (NYSE: JPM) has raised its target for the index to 6,500 by the end of this year.
Yet, a recent poll we ran revealed that investors are thinking about selling.
Here’s the thing: there are good reasons and bad reasons to sell.
So, let’s talk about them.
Good Reason #1: Your life needs the money more than the market does
Remember: investing is a vehicle to get you where you want to go.
You have heard me say this before: you are successful when you achieve your own goals – not because you beat the market and not because you held on longer than your kopitiam buddy.
But because investing did what it was supposed to do: fund a better life.
So, if taking some money off the table helps you in your life, that’s a good reason.
At the same time, if you’re like my co-founder David Kuo, who is not bothered by stock prices and is happy to receive dividends every month, there’s nothing wrong with holding.
Good Reason #2: Your wealth keeps you up at night
Here’s something few investors talk about openly.
Sometimes a stock does so well that it becomes too large a part of your portfolio.
What started as a modest position is now half your net worth.
You check the stock price first thing in the morning and last thing before bed.
That’s not investing; that’s anxiety with a brokerage account.
Selling a portion to bring a position back to a size you’re comfortable with is not a sign of weakness.
You’re not giving up on the business – you are right-sizing the risk so that you can think clearly.
The best investment decisions are made from a place of calm, not a place of fear.
If trimming lets you sleep soundly, that’s a return no stock can match.
Good Reason #3: The business underneath has permanently changed
Notice I said “business” – not “stock price.”
For instance, DBS Group (SGX: D05) saw its profits dip during COVID.
That was temporary.
The bank’s franchise, its digital capabilities, its deposit base – none of that was damaged.
Selling during a temporary setback would have cost you dearly.
But if a company’s competitive advantage is being eroded, if management is destroying long-term value, if the industry has structurally shifted – those are permanent changes.
Sell for permanent damage.
Hold through temporary discomfort.
The difference between the two will define your returns over a lifetime.
Good Reason #4: You made a mistake you now understand
We all make them, and I’m no exception.
Sometimes you buy a stock based on a thesis that turns out to be flawed.
Not because the market moved against you, but because your original reasoning was wrong.
Selling to correct a mistake isn’t a failure.
It’s a hard-won lesson that helps you make better decisions in the future.
The real failure is holding a mistake because you can’t admit you were wrong.
If Warren Buffett can publicly admit an error with his stocks, so can we.
Get Smart: The one terrible reason everyone uses
“The STI is at an all-time high. Surely it must come down.”
Think about what you’re really saying: the business is doing well, the market recognises it, and therefore you should sell.
Does that make any sense?
Here’s what nobody tells you: the moment you sell, one anxiety is replaced by another.
“Should I sell?” becomes “when do I buy back?”
And that second question has no good answer.
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Disclosure: Chin Hui Leong owns shares of DBS Group.
