In or Out- The No Bullshit Advice in a Bear Market
Do you sell your shares in a bear market? That is possibly the worst thing to right now when the market has fallen by such levels.
The only 3 reasons to do it now is unless you urgently need the money that selling the shares will raise, you think it will go down a lot more or the company you have bought is in dire straits, like Satyam for example (Aberdeen Asset Management was the biggest institutional investor and they claim they did not own any stocks in that company after the news broke about the scandal- suggesting they have either great investment managers, they have fortune tellers there or they have inside information. I have some of my own money parked with the unit trust managed by Aberdeen by the way. So I hope it is not inside information.)
If you think that it'd go down some more, I would suggest doing another thing instead of selling your shares or unit trust/mutual fund. Short the ETF (Exchange Traded Fund). Reason being is once you sold it, your paper losses becomes a real loss and psychologically you become a little more risk adverse and less inclinced to buy any more stocks. Also the ETF is a great little tool that enables you to short the market if you feel that is going down instead of using margin financing which requires you to pledge your shares as collateral. Not the thing to do in turburlent markets like now.
In fact, this is the best time to accumulate stocks after it has fallen by quite a bit and look for quality stocks that you can add to your portfolio. Those stocks that are likely to pay a dividend despite the economy being so bad is one that you can look for by reading financial news to look for those types of stocks.
I leave you with a commentary from a blog about one book that I have read which made me even more sure that saving and investing now is the best time to prepare myself for my retirement. A book review on Jeremy Siegel's "Stocks for the Long Run"
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