What to Do if Your Stock Portfolio is Down 40%
Posted March 13, 2009 by Bernz
These days, there may be nothing in the world more frightening than taking a peek at your investment or retirement portfolios, especially if they contain equities. Stock markets around the globe have been hit hard by the global recession and the value of both individual and corporate investments have been butchered across the board.
“Be fearful when others are greedy, Be greedy when others are fearful” ‘Warren Buffett’
So what can you do if your investment stock portfolio is down 40%? Here are some common sense tips:
1) Don’t panic. In difficult stock markets, many investors fear that when their stocks are going down, they will continue to go down so they jump off the train and sell their stocks to avoid further losses. Once you have sold your stocks, you have locked in that loss. Until then, there is the probability that the markets will recover and that you will be able to sell your stocks at a gain. Take time to sort out and plan your market strategy based on your investment goals.
2) Look at your time horizon. If you have five or more years before you will need the money from your investment or retirement portfolios, then it’s best to simply ride out the storm. Equity investments are meant for the long term and should be able to survive ups and downs. That doesn’t mean you should ignore your portfolio however. It is still important to assess the long term viability of each stock and cull out the ones who are not likely to regain value on the other side of the recession.
3) Look for the deals. The old adage of “buy low, sell high” is never more relevant than in today’s stock markets. While you are not likely to be able to “sell high” at the moment, you can certainly “buy low”. The best bets in the market today are those companies with solid financials that are simply being punished by the overall downturn. These companies will be strong throughout the recession and increase significantly in better times. Keep an eye out for any news on the company that could have a negative impact on share price in the near future.
Losing substantial value in your stock portfolio can make even the most seasoned of investors blanche. Taking your time and assessing your portfolio rationally will keep you from making a bad situation even worse. Your portfolio will be stronger when the market eventually recovers.
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Tags: equities, Investing Strategies, stock investments, Stock Market Investing, stock portfolio
This entry was posted on Friday, March 13, 2009 at 5:48 am and is filed under Financial Goals, Investing Strategies, Stock Market Investing, Wealth Building. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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March 14th, 2009 at 7:39 pm
Hey, I love it! I am a big fan of Warren. I wrote a post about his quotes myself. The comments in the video are right on. People who have cash on the sidelines should be looking where to pick up bargains.