McMurtry Investment Report and Model Portfolios™

Should I sell my losers now or wait for a better day?

Many investors, including institutional ones, routinely sell their losers right away thinking this is a good strategy to follow. In my opinion this is a very poor idea.

Many years ago I had a client who sold all his US investments at a loss. He thought he was being smart. Six months later the US stock market rebounded sharply and the securities he had sold at a loss earlier climbed back dramatically.

Recommendation

Never sell your stocks at a loss without assessing their future outlook. Do not let a paper loss affect your judgement.

Carry out some detailed fundamental analysis on both the industry and the specific company to determine if the current problem is a short or long term one.

If the company’s issues are short term in nature only, my advice would be to hold the stock until things improve.

On the other hand, if you determine the issues are more long term in nature, you can liquidate your position and move into something with a better outlook.

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