March 29, 2024

Bucks: The People Who Should Sell Stocks Now

The temptation to do something, anything, is overwhelming when stock prices are falling. Watching the market decline while you’re just standing there feels overwhelmingly foolish.

So ask yourself this: Why are you investing in stocks in the first place? The answer should give you a sense of whether you should stay or you should sell.

If you need the money soon, for a down payment on a house or living expenses in retirement, you shouldn’t have had much of that money in stocks in the first place. Selling now means locking in your losses, which will not feel so good if stock prices go up again in the next couple of months. Still, having most of your money in a savings account now would be better than having your stocks fall another 10 or 20 percent and then losing your cool and bailing out then.

If you can’t sleep at night or concentrate during the day, then that’s a sure sign that you did not belong in stocks in the first place. There is nothing like a quick market decline to provide a real-world test of risk tolerance. But so far, this is nowhere near as bad as what we experienced in late 2008 and early 2009. If you survived that, then you’ll probably endure whatever happens next.

Anyone else, however, is probably saving for a retirement that is a long way off. Some people look to accomplish this goal by investing every penny in their own business, and that works fine for some of them. Others are channeling everything they have into cheap real estate in the hopes of renting it out and becoming a land baron. Some people will get rich this way, without a doubt.

But for most people, it’s hard to imagine another investment with better odds of outpacing inflation and allowing for a decent retirement than stocks. True, few people would have chosen the do-it-yourself 401(k) system that has left each of us alone to make crucial decisions about our investments. In fact, it was for-profit employers that foisted it upon us because they didn’t want to bear the risk of old-fashioned pension plans.

You know who benefits from that move over the long haul though? Investors in the stocks of for-profit employers. And investing in stocks is a bet on capitalism. Even in the last few weeks, I haven’t seen any convincing evidence that there’s a better economic system out there.

What are you thinking as you watch the stock market fall?

Article source: http://feeds.nytimes.com/click.phdo?i=04bb0aad6f841537b4a0a22789aebc70