Marriage should be for life. But stock ownership? Not so much. Yes, I understand that a long-term buy-and-hold strategy keeps fees and taxes low and has generally proven to be a solid plan. But not all stocks are keepers — even supposedly reliable blue-chip stocks. Sometimes you’re better off casually dating them for a while and then moving on.
This obviously applies to speculative plays like biotech companies, tech startups or oil and gas exploration companies. But it can just as easily apply to established blue chips — even ones you might have held for years or even decades.
So, when should you consider parting ways with a long-held blue-chip stock? I have a few general guidelines.
- To start, do an honest assessment of the company’s growth prospects. If its market is mature and not likely to see significant growth, it might be time to move on.
- Also, look for the possibility of technological obsolescence. If you’re not sure what I’m talking about here, look at what Apple Inc.’s (NASDAQ:AAPL) iPhone did to BlackBerry Ltd (NASDAQ:BBRY).
- Price is also a consideration. If a blue chip is simply too expensive, then your returns going forward likely will be disappointing.
- But more than anything, think of opportunity cost. Money you have invested in a given stock is money you can’t invest elsewhere. So make sure that stock is the best use of your limited funds.
Today, we’re going to look at seven blue-chip stocks that you probably shouldn’t hold anymore.
All had their day in the sun … but now it’s time to move on.