What types of news announcements should warrant a sale of the stock?
News that affects the long-term prospects or the composition of your portfolio may warrant a sale—for example, a change in corporate strategy. Other news could affect short-term prospects for stock gains but won’t affect long-term operations. Product delays, natural disasters, and litigation are all examples of occurrences that may drag the stock price down temporarily, but rarely limit long-term growth for large companies. In these instances, you should consider all the products and income potential of a company when determining the net effect of a news event, not just the item tied to the event. The loss of a major customer is another example of an event that may result in a temporary price drop. Your initial analysis of a firm should include its customers and their stability as customers. Many small firms may have one or two major customers that would dramatically affect cash flow if they were to leave. Examining the remaining customers and other sources of income is necessary to ad
