Is now the time to sell your equities? Or is this really the question you should be asking yourself? No equity investment is immune when the stock market outlook suggests a correction. So is it the quality of your investments or the market outlook that has you thinking about selling? In other words, do you really have an investment strategy?
Bull markets, unfortunately, don’t last forever. And with the strong performance of U.S. stocks over the past several years, coupled with a disappointing performance by the U.S. economy so far this year, many investors question whether the bull market is nearing an end.
The more nervous of these investors may be asking themselves whether this is the right time to sell.
Since we don’t profess to be market timers, that’s not a question that concerns us too much. Overall, our strategic investment advice is to buy investments that suit your objectives and then hold.
This investment strategy has proven successful time and again because it serves two purposes.
First, it’s the best long term investment strategy for safety and security of capital. An investment strategy of active trading can be costly, especially in volatile markets.
If you stick to high-quality equity investments, on the other hand, you lay the groundwork for future capital appreciation. Once you have a high-quality base in place, then you can get more aggressive and increase your risks, depending on your comfort level.
Second, by buying and holding equities you profit from long-term growth. Or, as someone once said: “The wealthy people of 2025 are buying stocks in 2015.”
Too many investors, especially early in their investment careers, tend to sell a security after it has appreciated by, say, 20 per cent of so. The problem, however, is to replace one stock that has gone up 20 per cent in value with another one that will also go up by the same amount. It’s chancy at best.
If you’re thinking about selling, then ask yourself whether it’s your market outlook or your investments that have you thinking about selling. No equity investment is immune in a market correction.
You should sell an investment only when there’s a legitimate concern about its long-term potential or your strategic investment objectives change.
Money Reporter, MPL Communications Inc.
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