Panic and Sell, or Hold?

Once a month I will be answering a question from my readers. Please submit your question to me by e-mail to fern@wholeheartedway.com. I will pick one a month to answer.

Question – I am watching my account value go down every day. Should I sell my losers and keep my winners?
– Anonymous

Answer – You should not sell your positions just because we are in a market correction. If you have a portfolio with an asset allocation that fits your needs than that asset allocation should change only if your needs change – not because the markets are down.

A diversified portfolio will weather a storm like this. Don’t be naive in thinking that your portfolio will always go up. It won’t and no one can guarantee that it will. But a good portfolio that is designed to give you:

• the return you need to meet your short and long term goals

• risk that you are comfortable with (alpha, beta, standard deviation, and sharp ratios)

• tax advantages that you seek (long term capital gains, tax-free income, and dividends)

will always win out in the long run.

If you don’t have such a portfolio – than seek the advice of a fee-only planner (www.napfa.org) or a Financial Coach like myself to get you where you want to be.

Coaching Question – What holding has the largest percentage of your portfolio and why?