From Ken Little,
Your Guide to Stocks.
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Knowing when to sell a stock is just as important as knowing when to buy – more so by some accounts because it is seldom given the consideration as the purchase.

Selling a stock when something has changed with the company and the stock falters is one of the easier decisions.

Remember, you should buy and sell companies not stocks (unless you are trader as opposed to an investor).

If the company is doing well and you have a healthy profit in the stock, isn’t it a good idea to sell?

Stocks and Gravity

Unfortunately, too many investors have this idea that stock prices react to gravity – if they have been rising, it must mean they are due to fall soon.

One of the classic mistakes inexperienced investors make is not letting winning stocks run. (The other mistake is the failure to cut losses quickly.)

However, you should be aware of how a winning stock is changing your portfolio.

It is usually not a good idea to have more than 10 percent of your investing assets tied up in one stock.

Stock’s Run

A stock that has experienced a good run may exceed this percentage. It may also throw off your asset allocation.

Under these circumstances, it would be wise to sell off enough of your winner to get your portfolio back into balance.

As long as you still believe in the company and nothing has changed with its fundamentals or market, there is no reason to sell any more than is necessary to rebalance your portfolio.