Sell When There’s a Better Opportunity

Investors always have to face different alternatives about where to invest their money to receive the best return. The investor’s opportunity cost represents the loss of potential gain from other alternatives when one alternative is chosen.

In simple terms, opportunity cost is the benefit not received as a result of picking one investment instead of a higher-performing one.

Unfortunately, money is a finite resource. Oftentimes, investors have to choose between one investment and another. If you have your eyes on a stock that you think will outperform the one you’ve owned over a period of time, it may be time to sell. It’s difficult to know the opportunity cost with absolute certainty, but this is where the risk comes in and judgment calls are made.