When the markets took a nosedive in late August, this question started to crop up, and it’s been hanging around, wearing out its welcome for some time. If you owned a great piece of land, and the real estate market hit an all-time low… would you put it up on the market, or would you wait? The right time to sell is not when sentiment is low and fear is everywhere. The right time to sell is when there is tons of euphoria. When everyone is throwing their money at stocks, that’s when you want to look at your holdings and determine which pieces are ripe for sale.
If a stock goes up 200% in 8 weeks, be a little skeptical. Don’t necessarily cash in all your chips, but ring the register on some of it.
When markets are falling, ask yourself, “Is it time to be greedy yet?” The answer may well be “no.” You’re not trying to catch a falling knife. You’re attempting to spot great deals, just like you would with a doughnut, a vacation, and that nice piece of land.
The current market continues to look a lot like the market in 2011. In that year, we saw a waterfall decline, concern over The Fed’s potential actions, and we were marching towards an election. In October of 2011, the market bottomed out, with fear riding high, and then roared into a monster rally to close out the year.
If 2015 decides to match the patterns of 2011, we can reasonably expect a positive end to the year. Q4 is traditionally the most bullish seasonal period, and the strongest quarter of any year.
Regardless of the ride the market chooses to take us on in any given year, it’s important that short-term sentiment not drive investing decisions. There must be a methodical approach.
Ask Yourself These Questions
Why do you choose specific investments?
Why do you put your money where you do?
What makes a good investment for you, today?
Where do value and opportunity lie?
A rational approach to these questions will tell you exactly what you want to sell, and when, regardless of the fluctuations and emotions present in the market.
– Greg Stewart, CIO