Sometimes you just have to sell some shares to get money out of your investment account. When that happens, it's very different from a sale based upon your decision that a stock has reached its maximum value. Here are some thoughts to bear in mind, when you have to sell.

When you have to sell, it is sometimes tempting to place a market order. After all, that ensures that your sale will happen.

But if you are selling a sizable amount of stock, it is often dangerous to place a market order. If your order size is greater than the current BID on a stock, there is no obligation on the part of any market maker to give you the price of the current BID.

After all, the market is an auction. When you put up a large chunk of stock with a SELL AT ANY PRICE sign, your stock jumps to the front of the line. Once there, the first person to place a bid on the stock gets it. That's what a market order is!

When this happens, your stock may drop below the previous transaction price by a significant amount.

To avoid this problem, one approach is to place a limit order with a price in the spread, meaning somewhere between the BID and the ASK price. Of course, you need real time quotes to know what the spread is at the time you place your order. However, when you do this, particularly if you allow for partial fills, you will more than likely get your order executed at reasonably close to the current market price.

Having to sell is sometimes very difficult emotionally.

If you have confidence in the company and the market is down, or your investment premise (the reason you bought the stock) has not yet been fulfilled, it can be difficult to part with your shares.

The most difficult part of selling, because you need the money, is seeing the stock take off, sometimes right after you've sold it.

It's all you can do to keep from cursing as you calculate how much more money you would have had, if you had only held on a little longer.

When this happens, there just isn't much you can do about it. Somehow, you have to shake off "what might have been. " Concentrating on it is counterproductive, from an investor's perspective.

When you need money from your investment account, you don't always have to sell the stock. If you have a margin account, with available margin lending, you can have your brokerage send you a check. The money is simply borrowed, with interest accruing until you pay it back.

This provides you with the cash that you need, without having to sell your stocks.

The problem with this approach is that you now have exposed yourself to increased risk. If you don't understand margin, you shouldn't use this approach.

Margin debts never go down, of course, even if the stocks against which the money is drawn go down.

If you need to raise cash from your stock positions, it means you haven't got cash elsewhere. If that is the case, you are taking a huge risk by borrowing the cash on margin. All debt has to be paid eventually, and if you wind up with margin debt that you owe without having stocks to sell that cover it, you have a real problem.

A good use of margin, however, is when you are very close to reaching the long-term capital gains holding period. In this case, it is worth calculating the value of the tax you would owe if you sold immediately.

Margin rates are often some of the most competitive around compared to home equity loans and credit cards.

The last thought about selling stock to raise cash is that you should take taxes into account.

If you are fortunate enough to have several stock positions to choose from, it is worth taking the time to figure out which of your positions has the best tax advantage for you.

If you already have capital gains for the year, it may be worth selling stocks you have a loss on. The losses will offset the gains on which you owe taxes.

If you don't have capital gains or losses to offset, selling the stocks with the least amount of taxable gain may be the best approach.

Robert V. Green