Locking in disaster?
Posted on October 15, 2008
Filed Under All |
So, we are sufficiently long in the tooth to have been through a couple large ‘corrections’ in the stock market. A few days after I had proudly bought a few shares in a mutual fund in 1987 (and was busily jabbering about it to my friends an co-workers), along came Black Friday Monday, and my shares lost (I think) about 30% of their value. I stopped talking about my investments.
Since then, we’ve been through 3 or 4 other scary roller-coaster dips: I’ve never joined the panic and sold. That may be the only smart thing I’ve ever done in the market. This time around, as I watched my life’s accumulation of ‘wealth’ head precipitously south, I briefly considered what to do: I realized that selling would lock in my losses, whereas standing pat meant they might come back, someday. We didn’t sell: now we just have to get through a recession… also not a new thing…
Comments
3 Responses to “Locking in disaster?”
Leave a Reply
Good choice - difficult to not be reactive, but otherwise, as you said, you’d commit to the loss as opposed to riding it out. Some, including my ex-IRS father-in-law, say now is the time to invest what you can while everything is low - also difficult to do when everything is so uncertain . . .
The big question is where is the recession? Lots of layoffs have been announced in Texas, New York, Illinois & of course Michigan but Silicon Valley is still booming & Palo Alto is still the world’s fastest appreciating real estate market. What would happen if we didn’t have 24 hour AP news quotes from Michigan repeated on thousands of blogs?
What cash I have is going to go… somewhere, maybe a small cap mutual fund (I am notoriously bad at picking stocks). Have to agree that all I see in Silicon Valley and San Francisco are bustling crowds, busy shops and packed restaurants… things may be different in Ohio and Michigan…