Is it Time for You to Sell Your Stocks?

Given Recent Volatility, Here are 8 Questions You Need to Answer

stocksDuring my career, there have been several occasions where I have seen folks so nervous and confused over their investments that they start losing sleep. Or worse, they stop paying attention! There was the client in 2001who handed me a stack of statements from his Merrill Lynch account. There were over a year’s worth and none of them had been opened! Turns out he had lost almost half of what was invested there. There was another high earning professional in the same era who told me he was “one more double away from retiring, then the market screwed me”, and he is still working, 12 years later. In more recent times, I have had clients who lost fortunes with Bernie Madoff, mutual funds, second trust deeds, tenants in common real estate programs, etc. The common threads shared by nearly all of them were their focus on returns when they bought in and the lack of context for the original decision to invest.

So if you want to avoid significant losses and frustration in the future, here are some questions you need to ask yourself now:

  1. How did you feel during the market volatility of the past few weeks? The markets lost nearly 10% in a couple of weeks’ time. It was a very sudden and sharp selloff. Did you question your judgment? Did you wonder if you should sell or buy more? Did you feel any anxiety? If you did, maybe you have too much exposure to the market, for your personal comfort. If you didn’t know there were market losses, you really should consider putting your money somewhere else. Anything you can lose 10% of its value in a few days’ time needs to be attended. If you are ignoring your investments altogether, you should have your money in things that can’t lose money at that pace.
  2. When am I going to need to access some or all of this money? If you might need to get at some of those funds in less than 5-6 years, you must protect yourself on the downside. There just isn’t time for the market to recover which makes the loss forever, and it can’t come back once you spend the money.
  3. Why did I buy this investment in the first place? Make sure the reasons you bought something before are still valid today. Life and markets have a tendency to change. What made sense before, may no longer.
  4. What is this money for? Having context is probably the single biggest thing you can do for yourself. Once you are clear on what you want and are trying to accomplish, decision making becomes easier and the solutions clearer. I like to have clients “start with the end”. After all, money is only a tool that helps provide lifestyle. If the goal is to just make more money, you will find you are more prone to losing and probably not be satisfied in the long run with any of your money decisions.
  5. How do I get my money back? A quote that once was attributed to Will Rogers (but wasn’t his after I researched it), said; The most important thing in any investment is the return OF my money, not the return On my money. You always want to know your options if things go wrong. This will let you live to fight another day.
  6. Am I really making money? You have to factor in taxes, fees and inflation to see if you are getting ahead or falling behind. I had a client once who told me she loved her investment advisor. Once we factored in the fee she was paying the broker and the taxes being generated by over trading, she was making less than 2%, without considering inflation. When she went back to her advisor, she was told, “My job is to create taxes for you. That means we are making money”!
  7. Is money keeping me up at night or helping me to sleep better? If you are losing sleep over your investments, you are in the wrong investments for you. They may not be bad for someone, but they are not appropriate for you. Too many people invest in things that they are told they “should”. For example, “You have to invest in stocks, how else will you beat inflation”?
  8. How much are you prepared to lose? Wall street is great at advising us when and how to buy stocks, but short on recommendations as to when to sell? This is one of the main sources of frustration I see in my practice. Do you have a sell strategy? How long do you hold on? If not a sell strategy, do you at least have a strategy in place to limit your losses? If not, ask yourself what happens to you if we have another decline like 2001 or 2008?

At Gainer Financial, we want you to know the answers to all these questions. We want you to sleep well at night and have a context for your financial decisions. If you would like to see how we might help you find answers to your questions, contact us here and enjoy a 45 minute no cost or obligation consultation. Isn’t it time for your questions to get answered?

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Trackbacks & Pingbacks

  1. […] better at night, not keep you awake! A couple of years ago I wrote an article on this topic, ‘Is it Time to Sell Your Stocks’,  which lists the eight questions you need to answer before you decide.  You need to know as […]

  2. You just plain feel nervous and stressed over the volatility and future prospects, then move to assets and strategies that include guarantees or significant security because of collateral.

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2 replies

Trackbacks & Pingbacks

  1. […] better at night, not keep you awake! A couple of years ago I wrote an article on this topic, ‘Is it Time to Sell Your Stocks’,  which lists the eight questions you need to answer before you decide.  You need to know as […]

  2. You just plain feel nervous and stressed over the volatility and future prospects, then move to assets and strategies that include guarantees or significant security because of collateral.

Leave a Reply

Want to join the discussion?
Feel free to contribute!

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