The paper "Is It a Good Idea to Hold Good Stocks Even if the Overall Market Is Overvalued" is a delightful example of an assignment on finance and accounting. Keep holding and do nothing. The current stock seems to be doing great and against the earlier projections in the market over the years. Leaving the company would mean leaving the market one is well aware of, and that has grown drastically over the years. Since overvaluation of shares is measurable using a range, then where the ceiling range remains not bleached, holding is necessary.
The implication of holding is that one is not required to pay the capital gains taxes, and the long-term investment could result in higher returns in the future. However, where the company’ s long-term potential does not offset the overvaluation, the stocks will crash down, and investment money will be lost. Where the competitors rise to surpass or shatter the planned development by the company, it would damage the company to reach points where it could fold, and investors would lose money (Kolodovoski, 2014). Take some profit off the table by disposing of some of the stock and paying the capital gains tax.
Selling some of the stock and holding some would work as a lever to offset any shocks in the market. The competitors are getting stronger, and that could damage the company where its share price would fall. The company could also remain on its successful path, and the stock value would increase. To ensure that the investor is shielded from both a partial sale to offset the initial investment is necessary. Selling a quarter of the stock at $45 having purchased them at $12 means that the initial investment gets almost catered for, and future decrease in the stock won’ t make the investor lose money.
Maintaining some stock prepares the investor for the future success of the company (Kolodovoski, 2014). An outright total sale of the stock and payment of the capital gains tax. Overpriced Shares and the continuation of that trend means that the range is growing bigger with time. Letting go of the stock protects the stockholder from the future collapse of the company.
The investor would make massive profits by selling at the current market price of $45. The implications of an outright sale would be losing in big if the company were to make successful decisions and the share price increases. The other implication is being protected from the folding of the business if the future investment does not work as required (Kolodovoski, 2014).