Selling off stocks when they’re down
Question: Based on the advice in your newsletter back in April, I switched to 100% S Fund @ 19.0601 per share. Currently the share price of the S Fund is 16.5461 per share.
My question is this: would I not lose a lot by selling off the S fund shares now at a lower price than when I bought them, and buying F &/or G Fund shares?
Also, would I be stupid for holding my 100% S Fund shares until they recover back to 19+ per share?
Response: Thanks for a great question. It comes up a lot.
About whether you would lose the money by selling the S Fund. Unfortunately, the money is already lost. Whether you sell the S Fund or hold on to it, the past has already happened and the loss has already occurred.
The important question is, What is the best action right now? I did think at one time that the S Fund would go up. I was wrong. It did not go up. But that mistake is in the past. Right now, I no longer think that the fund will go up in the near future. At least not as much as the F Fund will, which is probably not much, but it’s better than nothing.
About whether you should hold the S Fund until its price comes back to the price at which you bought it. No one knows the future. The S Fund could come back to 19 next week. Then, if you sell now, you will be kicking yourself. But the problem is that we don’t know whether it will come back or not. It might stay flat, in which case, if you keep holding it, you are missing the opportunity to make money in other funds. Or it might drop even more, in which case you will lose more money.
Since we don’t know the future, all we can do is make decisions based on what’s most likely to happen. In my opinion, and I could be wrong, the S Fund is not coming back in the near future. I see it as being flat for now. The F Fund, on the other hand, is trending up. That’s the reason for my recommendation to switch into F.
Hope this helps.
Related posts:
- Accumulating shares and paper losses
- Focus on return and risk, not price; losses are locked in as they occur
- Should I hold on after losing a lot of money?
- Locking in losses
- Switching to this newsletter