About a year ago, I joined an investment club. During the past two meetings, it became clear who viewed the current stock market as an opportunity to make money or lose money.
Last month the membership discussed market research indicating a further decline both in the near and mid-term. The meeting then focused on what positions to sell.
One side of the room was upset with the majority’s decisions to sell stocks. The Upsets preferred to keep the money invested as it was. They were content to have their investments further erode believing it was not the time to sell but hold.
The Sellers voted to cut losses and have a treasure chest of cash. Their strategy was to take advantage of the upcoming buying opportunities. The club may buy back some stocks it sold but at a lower price.
One person was so upset, someone had to drive her car home for her. A couple of members may not be on speaking terms now.
An analysis of the stocks sold last month showed the club saved many thousands of dollars by selling when it did. This month the Sellers became Buyers. A few out-of-favor stocks like Goldman Sachs were purchased to better allocate assets across industry sectors and to better balance the portfolio.
FYI: The largest chunk of stocks sold last month were the various semiconductor shares. Even with the announcement of the USA halting the sale of semiconductors to China since then, the Upsets continued to grumble that the Sellers engaged in a “selling frenzy” (something quite negative from that point of view).
What would you have done if you were a member of the investment club? Hold on tight and watch your investments continue to lose value or redeploy and rebalance your holdings with undervalued stocks?
Respond to this email with your thoughts revealing your perception of stock market risk at present. Or book an appointment with me using the yellow box to discuss this one on one.
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