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by Dick Brudvik, SVP, Senior Trust Officer
When the market drops, it’s not uncommon for some investors to want to sell or change their allocations. I often get phone calls from clients who want to make changes following a market correction (a change of 10 percent or more).
From the 1987 savings and loan crash to the Great Recession of 2008, I have seen a lot of corrections in my nearly 40 years in the industry. Those experiences have reinforced what history has shown us – investors tend to fare better when they stay the course.
If you’re thinking of making changes to your portfolio, follow this chart to help determine the best course of action.
The problem with getting out of a market allocation is people often don’t know when to get back in. Market timing sounds good in theory, but it generally doesn’t work in practice.
There are also tax considerations to keep in mind if you sell.
When deciding to stay the course or sell, you want to make sure your reasons are sound and not a knee-jerk reaction to a market fluctuation. Stopping to think about your reasons for moving an allocation can help you be sure – so can talking with your advisor. If you don’t know what to do, give me a call, and I’ll talk you through it.
Investing and wealth management products are not FDIC insured, have no bank guarantee, may lose value, are not a deposit and are not insured by any federal government agency.