I neither want nor would presume to tell anyone on this text what to do either with any particular stock or in a OIL situation we are now facing. I can only tell you what I am doing based on the experience I’ve gained in the market over the last 30 years and three or four similar drops, but It is not necessarily the best course of action for everyone. I should point out a misunderstanding in your question though: I am not worried about “realizing losses”, but rather realizing the tax gains and having to incur that liability…which is upwards of 53% of the gains between federal and state taxes in our wonderful state of CA. But taxes are the least concern and I would never let them dictate IF I sold a company, especially if the company stumbled or failed. On occasion I might let it dictate the timing. I also clearly could have dumped my whole IRA with no tax consequences, so that is not a reason to hold blindly. Again, this is irrelevant, really.
The market has already corrected 20-25% (Dow 25%…S&P 20%) already as of today. The damage is done in the market, which always precedes and predicts the economy, which may be headed into a recession. Yes, the market could go a little further down, will continue to be volatile with all the media, Covid-19, oil wars, shut downs etc….but I have to direct you to the text just preceding this one above and won’t reiterate all the points and reasons I choose to sell. It’s a personal decision you have to make. I choose to hold as these are solid companies. If I were completely 100% in cash today and had been lucky to sell in January or February, I would be investing in these companies and buying their stock today…actually, I would be buying some of them hand over fist at these discounted prices. Yes, in the chaos today, I even bought a little more AYX early this morning at $107/share. I, personally, would NOT be selling them. If I needed the money in the next 12-18 months, then perhaps it should not have been invested here at all, but these companies stock prices will rebound eventually and go even higher…yes, it could take 12-18 months in the worst case scenario.
Note that this portfolio, as of today, is neither up, nor down…it is literally at -0.5% returns YTD, more or less where the portfolio started on Jan 1, 2020….but still up several hundred percent vs two years ago. When it rebounds, it will do so fast and I, personally would not be able to time it and would not want to try. That is just how I feel. Again, I can’t tell you what you should do. Your age, other assets, family, risk profile, job, retirement, size of the portfolio and so many factors make that impossible. I can only tell you I am not selling at these levels. A few weeks ago (see a past text) I sold the small amount I wanted to sell in the stocks I was happy letting go. At this point today, I would rationalize that we are at a point in the cycle that psychology and most experts agree, is exactly the point of capitulation by the majority when the markets have to start to reverse, as the sellers dry up and the selling pressure turns into buying. I would however never want to carry this market risk with holdings I did not believe are solid and/or would not rebound when things are on solid footing again. Just my opinion. My advice: do what allows you to sleep at night! 😉. Cheers! -V
