Sell or hold share dilemma
Anthony Keane DOESan uneasy feeling of deja vu in the share market worry you that a bigger, scarier version of the global financial crisis is on the way?
Since April our share market has slumped more than 8 per cent andmany of our biggest companies including ANZ, Westpac andBHPBilliton are down more than 10 per cent. Investors are clearly nervous. European economies look cactus and the unemployed masses there are protesting, North Africa and the Middle East appear to be imploding, the massive debt of theUS threatens to drown it. There are even worries that China, our economic saviour of the past decade, could falter.
So what do you do? Do you sell or reduce your share investments, or do you buy up big in the belief that stocks are at bargain-basement prices?
Only a gutsy few would go on a share-buying spree amid all this uncertainty, whilemany investors, still smarting from the pain of 2008, would be tempted to sell.
I reckon you need to stick to your long-term investment plan. Of course, you need a plan first.
Myplan was to invest heavily in shares during the 2008 downturn and hold on to them for at least a decade. Unfortunately, I went in too early during the downturn, lost a bundle andamstill waiting for it to get back to the starting point.
The All Ordinaries Index still needs to climb another 48 per cent to get back to its 2007 record high, and analysts say thismaytake anywhere between three years and nine years. Obviously, it will require patience by investors.
During the recovery from the global financial crisis, our market has absorbed European debt problems, global political upheaval, and natural catastrophes. All recoveries have corrections, and JuneAugust is a traditional time of weakness as the northern hemisphere goes on holidays.
Nobody knows what the future holds, so ask yourself what scares you most: another market crash or regretting that you sold out when the
WORRIES: An investor ponders the market.