Wednesday, February 11, 2009

Sell stocks or stay put

The value of your portfolio is dwindling by the day. So what should you do about it?

By Walter Updegrave
Copied and Posted by Jennifer Ng

Question: I've been sticking with my investments in the hopes that the market will recover, but I'm tired of seeing the value of my portfolio continue to drop. Should I just sell everything, put the proceeds into money-market funds and bonds and wait until we see an upturn before getting back in the market? Or should I hang in there with my present portfolio of stocks and mutual funds?  Eric Rosenberg, Little River, South Carolina

Answer: You've asked two questions that I'm sure nearly all investors are grappling with today to one degree or another.

Given the market's dismal performance, should you sell your stock holdings, hunker down in safer investments and jump back into equities after stock prices have rebounded?

Or should you just ride out these tough times with the portfolio of stocks and funds you already have?

It may seem that by answering the first question, I would also automatically be answering the second. But in fact, even though these two questions are related, they require separate answers.

So let me start with the first: The answer is no.

Dumping stocks
On the face of it selling now, sitting safely on the sidelines and then reinvesting once stock prices have recovered seems like the obvious choice. After all, why own stocks when the market is struggling if you can simply wait until the turnaround arrives and buy in then?

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