Should I cut loss at 20% on my non-financial related stocks or keep them for better days?

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OCMan_IHB

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The market is down and I am a fool for staying with some of my stocks. I would like to know (especially those of you investors) whethere I should cut my loss on stocks (such as stock symbols AAPL, V, BABY, MELA) and have 100% in cash or not. These are tech, science and medical stocks. Well, except Visa but I don't think they hold a lot of subprime or alt a mortgage on their paper.



Needless to say that I'm stressed since I've been saving for downpayment and using a good portion to buy these stocks with time/cost average methods but still down nealy 20% on the paper. Against my gut feeling, I think, I should hold on and hope for the better days in maybe 6 months or a year.



The biggest disappoint would be having to extend one more year on my lease next spring and push back home buying opportunity in late 2009 or early 2010 but this could be good after all, right??? Irvine Renter, I especially would like to know what you think. Thanks.
 
From all I have ever heard, it would be wrong to dump these stocks when they are down. There are plenty of people ready to buy when stocks are this cheap. The majority of people who lose in the stock market, lose because they constantly buy and sell at the wrong times. I haven't met anyone who can predict what is going to happen on a day to day basis. Almost everyone was betting on a big crash last Friday, didn't happen. Anyway, the bailout details will probably give you a better clue as to what to do. As for buying a house, definitely wait, even if it does turn around in the near future (fat chance), we'll most likely sit at the bottom for a long time. Just my two cents.
 
I dunno, I sold 80% of my stocks last fall. The housing

mkt in South Fla had died, and was dying elsewhere, nobody

had any money. Was planning to buy back in when the mkt went

below 10000 but am seriously re-thinking this. If the bailout passes

stocks will go up for a bit, so maybe you can get out them.





The 700b, if passed is too little too late, and aimed at the wrong

problems, so I expect the mkt to drop back down after people

realize that.
 
[quote author="OCMan" date=1222560914]The market is down and I am a fool for staying with some of my stocks. I would like to know (especially those of you investors) whethere I should cut my loss on stocks (such as stock symbols AAPL, V, BABY, MELA) and have 100% in cash or not. These are tech, science and medical stocks. Well, except Visa but I don't think they hold a lot of subprime or alt a mortgage on their paper.



Needless to say that I'm stressed since I've been saving for downpayment and using a good portion to buy these stocks with time/cost average methods but still down nealy 20% on the paper. Against my gut feeling, I think, I should hold on and hope for the better days in maybe 6 months or a year.



The biggest disappoint would be having to extend one more year on my lease next spring and push back home buying opportunity in late 2009 or early 2010 but this could be good after all, right??? Irvine Renter, I especially would like to know what you think. Thanks.</blockquote>


I don't want to start giving investment advice, particularly with stocks as they are so volatile and unpredictable.



I would note that if you are feeling pain and considering selling, then so are many other people. This means we are probably one more drop away from a durable bottom. When non-professional investors feel pain, market volatility increases. When non-professional investors sell out of fear, the market plunges and puts in a bottom. In all likelihood, if you sell, you will sell at or near the bottom because you will be making a fear-based emotional decision. Read this post: <a href="http://www.irvinehousingblog.com/blog/comments/speculation-or-investment/">Speculation or Investment?</a> It may help you understand your own emotional cycle relative to price movements. I suspect your pain will get worse before the market bottoms. I don't believe we have seen the lowest low this recession will bring us. Personally, I am 100% in cash. I will start buying when sentiment is very bad and it looks like the market will continue to drop forever. That is when the bottom will form. Unfortunately, since you already have a position, you must either endure the pain or sell and lick your wounds. I don't have the answers for what you should do. Real estate markets are a bit easier to predict because they move in such long-term trends with clearer inflection points. Stocks are a big guessing game.
 
I'm pretty sure V gets its income based on how many "swipes" of their cards. With ppls credit limits maxing out, I would expect a decreasing number of "swipes" in the future. I would get the eff outta V, likely you are at break even given you were there for the IPO.



AAPL, same story, the consumer is currently getting hosed for this mess we're in. They'll buy food before they buy iphones.



NXG and CEF FTW (this one isnt a ticker symbol, but if it was, I'd be in it)



Mind you, this advice comes from the guy who bought some WM last thur planning to sell the next day, oopps!!
 
OCMan,



I hope you are not still holding your Apple Shares. It is down 15.20% percent right now. Scary times, I tell ya.
 
I think we are getting close to a bottom... Sentiment is so poor. Average Joe is pulling his money out now and that is often a good time to get in.



I expect to be re-entering equities, from my nearly all cash position, fairly soon. We are re-testing the lows on the S&P today. It will be very interesting to see if we hold and bounce off S&P 1125 and Dow 10,500.
 
[quote author="ipoplaya" date=1222736678]I think we are getting close to a bottom... Sentiment is so poor. Average Joe is pulling his money out now and that is often a good time to get in.



I expect to be re-entering equities, from my nearly all cash position, fairly soon. We are re-testing the lows on the S&P today. It will be very interesting to see if we hold and bounce off S&P 1125 and Dow 10,500.</blockquote>
We are going to start dollar-cost averaging back into the market. We may be a bit early, but that's OK.
 
I can't recall the last time I saw the Dow off over 700 points. I don't know that I ever have...



Today was panic selling. I would not be terribly surprised if we are at or near an intermediate term bottom. I have no plans to put any money in and find out though...
 
Don't be knife catchers. We spend a lot of time laughing about all the fools who tried to flip some houses last spring when it seemed so obvious to many of us housing was going down. Stock market is nowhere so obvious, but there's no sign of an uptrend here. Why not wait till an uptrend can be visible? Contrary to public opinion, it is NOT true that once the trend is obvious, ti is over.



It should be obvious though that we have right now is not a "normal" market environment when we have all these 400 point daily swings. What this tells me is "conventional wisdom" likely won't work here. Don't be like all those people who thought real estate only went up. A 25% bear market is not a record by any historical measure (it's in fact below average still), and I wouldn't necessarily believe a straight bull market will follow this stint either.



I don't think it's useful to panic and sell stock if you already have them. There's tax implications there, a financial advisor would be better suited here. V and APPL seem a bit iffy to me here since they were some of the "obvious" hype stocks of 2007 & 2008. But I'm not a seer, nobody knows where APPL/V will go. They're facing strong headwinds imho, but human nature being what it is, anything can happen.



Your other two stocks aren't as obvious and I can't see why they would get affected that much by the downturn.



These aren't ordinary times, I think we need to prepare for all possible eventualities. Including the one where both real estate and the stock markets will stay flat or decline for the next decade. Not necessarily, but no longer a zero-possibility imho.
 
[quote author="IrvineRenter" date=1222603404][quote author="OCMan" date=1222560914]The market is down and I am a fool for staying with some of my stocks. I would like to know (especially those of you investors) whethere I should cut my loss on stocks (such as stock symbols AAPL, V, BABY, MELA) and have 100% in cash or not. These are tech, science and medical stocks. Well, except Visa but I don't think they hold a lot of subprime or alt a mortgage on their paper.



Needless to say that I'm stressed since I've been saving for downpayment and using a good portion to buy these stocks with time/cost average methods but still down nealy 20% on the paper. Against my gut feeling, I think, I should hold on and hope for the better days in maybe 6 months or a year.



The biggest disappoint would be having to extend one more year on my lease next spring and push back home buying opportunity in late 2009 or early 2010 but this could be good after all, right??? Irvine Renter, I especially would like to know what you think. Thanks.</blockquote>


I don't want to start giving investment advice, particularly with stocks as they are so volatile and unpredictable.



I would note that if you are feeling pain and considering selling, then so are many other people. This means we are probably one more drop away from a durable bottom. When non-professional investors feel pain, market volatility increases. When non-professional investors sell out of fear, the market plunges and puts in a bottom. In all likelihood, if you sell, you will sell at or near the bottom because you will be making a fear-based emotional decision. Read this post: <a href="http://www.irvinehousingblog.com/blog/comments/speculation-or-investment/">Speculation or Investment?</a> It may help you understand your own emotional cycle relative to price movements. I suspect your pain will get worse before the market bottoms. I don't believe we have seen the lowest low this recession will bring us. Personally, I am 100% in cash. I will start buying when sentiment is very bad and it looks like the market will continue to drop forever. That is when the bottom will form. Unfortunately, since you already have a position, you must either endure the pain or sell and lick your wounds. I don't have the answers for what you should do. Real estate markets are a bit easier to predict because they move in such long-term trends with clearer inflection points. Stocks are a big guessing game.</blockquote>


IR, this is the "market wisdow" I have heard for so many years now. Yet how can anybody prove this? I think that postulating that retail investors are always "the dumbest of the bunch" and are the only ones selling in panic is a gross exageration. Either way, it's just one of these "truths" that no one can actually prove or disprove. Using this theory you would think the markets would be super-stable if all the retail investors went away. I don't think that's true.



Imho retail investors are not driving this market. No retail investor I know will watch C-Span and drump all their portfolio holdings the second the vote fails. Yet that's pretty much what just happened. People who are willing to dump (or sell short) all their stocks on a news event in a second like this will buy them all back on the next positive news. Slow sustained drops are much more dangerous than these one-day crashes.
 
Most sentiment indicators are counter intuitive. One of those is the odd-lot short sale statistics. Whenever there is an increase in odd-lot short sales (the general public is selling short) the markets tend to rally.



[quote author="muzie" date=1222747348][quote author="IrvineRenter" date=1222603404][quote author="OCMan" date=1222560914]The market is down and I am a fool for staying with some of my stocks. I would like to know (especially those of you investors) whethere I should cut my loss on stocks (such as stock symbols AAPL, V, BABY, MELA) and have 100% in cash or not. These are tech, science and medical stocks. Well, except Visa but I don't think they hold a lot of subprime or alt a mortgage on their paper.



Needless to say that I'm stressed since I've been saving for downpayment and using a good portion to buy these stocks with time/cost average methods but still down nealy 20% on the paper. Against my gut feeling, I think, I should hold on and hope for the better days in maybe 6 months or a year.



The biggest disappoint would be having to extend one more year on my lease next spring and push back home buying opportunity in late 2009 or early 2010 but this could be good after all, right??? Irvine Renter, I especially would like to know what you think. Thanks.</blockquote>


I don't want to start giving investment advice, particularly with stocks as they are so volatile and unpredictable.



I would note that if you are feeling pain and considering selling, then so are many other people. This means we are probably one more drop away from a durable bottom. When non-professional investors feel pain, market volatility increases. When non-professional investors sell out of fear, the market plunges and puts in a bottom. In all likelihood, if you sell, you will sell at or near the bottom because you will be making a fear-based emotional decision. Read this post: <a href="http://www.irvinehousingblog.com/blog/comments/speculation-or-investment/">Speculation or Investment?</a> It may help you understand your own emotional cycle relative to price movements. I suspect your pain will get worse before the market bottoms. I don't believe we have seen the lowest low this recession will bring us. Personally, I am 100% in cash. I will start buying when sentiment is very bad and it looks like the market will continue to drop forever. That is when the bottom will form. Unfortunately, since you already have a position, you must either endure the pain or sell and lick your wounds. I don't have the answers for what you should do. Real estate markets are a bit easier to predict because they move in such long-term trends with clearer inflection points. Stocks are a big guessing game.</blockquote>


IR, this is the "market wisdow" I have heard for so many years now. Yet how can anybody prove this? I think that postulating that retail investors are always "the dumbest of the bunch" and are the only ones selling in panic is a gross exageration. Either way, it's just one of these "truths" that no one can actually prove or disprove. Using this theory you would think the markets would be super-stable if all the retail investors went away. I don't think that's true.



Imho retail investors are not driving this market. No retail investor I know will watch C-Span and drump all their portfolio holdings the second the vote fails. Yet that's pretty much what just happened. People who are willing to dump (or sell short) all their stocks on a news event in a second like this will buy them all back on the next positive news. Slow sustained drops are much more dangerous than these one-day crashes.</blockquote>
 
I'm 60-70% in cash(I pulled out 2 years ago). I bought a put on the Market pre-crash 1987 and it dropped 500+ points plus which was roughly 22% of the Dow Jones, maybe this is what you can do if this is still allowed. Not sure what advice to give you except that it does make a lot of people nervous. My neighbor and his wife have been saying that they might have to work longer to make up for this short fall.
 
[quote author="WestparkRenter" date=1222753973]I'm 60-70% in cash(I pulled out 2 years ago). I bought a put on the Market pre-crash 1987 and it dropped 500+ points plus which was roughly 22% of the Dow Jones, maybe this is what you can do if this is still allowed. Not sure what advice to give you except that it does make a lot of people nervous. My neighbor and his wife have been saying that they might have to work longer to make up for this short fall.</blockquote>


Well... in a depression (just for the sake of argument), everybody gets poorer, so... technically you don't need as much money to get the same standard of (retirement) living as fewer dollars are chasing goods.



In an inflationary scenario... well, nobody can retire.



Basically, each generation is in the same boat, except for the very few that actually manoeuver these markets. Considering most people are indexing nowadays, most are on that one boat, and sinking together.



And of course those who had all their retirement funds in their house, well those people must have figured out by now that that's not going to work.
 
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