There are four valid financial reasons to sell your shares. There may also be personal motives, such as financing a family business or buying a new home.

My sell rules will help you to meet your financial objectives, but you must avoid a short-term approach. It is easy to get carried away by the highly-contagious panic mood swings of the stock market.

1. A MISTAKE It is not easy to distinguish long-term growth companies from ones that are buoyed by short-term market perceptions which turn out to be misconceptions. Investment errors are easy to recognise but hard to admit. Most of us prefer to hang on to a paper loss in the hope of at least breaking even before selling.

But denial will compound your investment errors, so limit damage by admitting them.

2. DETERIORATION It is important to identify deterioration in a business before everyone else does, or you will miss the opportunity to sell at a good price. Do not hang on to a deteriorating investment unless there are signs of a regeneration of growth, perhaps from a new area of the business.

If the decline in your company's prospects is due to a negative change in the sector, you should stay invested long enough to allow for remedial action. However, if the deterioration in the business stems from stale and complacent management, you ought to think about selling.

3.BETTER OPPORTUNITY

If you can afford regularly to pump fresh funds into your share portfolio, your investment fund will compound and grow faster. Realistically, however, this option is not always available. When a good investment opportunity presents itself, the only solution may be to sell something.

4. HARVEST TAX GAINS

Boost your annual income by harvesting some or all of your capital gains tax exempted allowance of £7,100.

1. PENDING BEAR MARKET

After a long bull market run there could be a correction, triggered by fear of higher inflation and interest rates, or destabilisation in an economy on the other side of the world. Such corrections are usually triggered by events not on the radar screen now, so do not try to guess what the market might do.

2.A REAL BEAR MARKET

You would be joining in the madness of crowd psychology. You might sell your shares for a price that subsequently falls further, but may not be able to buy before the shares rebound.

3. A RAGING BULL MARKET

If your shares soar, and the financial community's argument to lock in your profit seems compelling, stop and think of it in terms of gardening. Selling in these conditions is the equivalent of pulling up the healthiest and rarest blooms and leaving the weeds.

Do not sell shares that have soared in order to reinvest in others that have underperformed. It beggars belief that highly-paid professionals not only advise this nonsense, but also act upon it.

Nor should you sell if the market is disappointed with results, or if analysts downgrade expectations from a company because a rival has issued a profits warning.

Real Wealth Creation, by Stella Shamoon, published by Orion on October 21, is available from The Times Bookshop for just £14.99 (RRP £16.99) including postage and packing (in the UK). To order, call 0870-160 8080