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What to do with Stocks that have Big Losses

January 26, 2016

Many investors currently have stock positions with substantial losses, want to get out but also want to wait until after the stock recovers somewhat to sell them.  This is particularly so with heavy investments in sectors that have tanked.

In some manner, every day when you look at your portfolio you make a decision to continue holding or selling each stock.  Daily volatility is expected and is normal and unless there are major changes, remaining with the positions are usual.

Holding a stock you do not have long-term confidence in is no different than a decision to buy that stock at the current price.  If you would not buy at that price, then sell it, take your loss and use the proceeds to buy something else to upgrade your portfolio.

The market does not have a memory.  It doesn’t know that a stock was higher – it only knows what it is worth now or might be worth tomorrow and in many tomorrows after that.

I suggest that when you have stocks that have dropped substantially, in an industry with a bleak outlook, with cut dividends and doubt of any increases back that you sell and upgrade your portfolio.  Upgrading your portfolio means to me that you invest the proceeds in something less risky with a likely sustainable dividend.  A suggestion is a large index or mutual fund with a history of paying steadily increasing dividends.

This blog is directed at people that invest primarily to secure their financial future or to accomplish specific long term goals.  Financial security is accomplished with a diversified and lower risk portfolio, not with disproportionate large positions in single stocks or sectors.

One Comment leave one →
  1. 6hawthorne permalink
    January 26, 2016 12:57 pm

    Hi Ed you sell all the stock you have a big loss and if you still like the stock you could buy iy back in 30   days also you could sell stocks that you have a gain in and apply it against the lossBob NAGLER

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