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Julia | Is it the time to sell stocks when news of recession hits? |
I was going to hang on to stock, but should I sell now the economy is heading for a recession?
Additional Details
I didn't buy the stock, it was gifted to me. It was as high as $49 at the end of last year, not it's in the low $40s. I just don't want to sell when it's in the $30s. |
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Stuart M
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I don't know how fancy you like to go, but you could always explore the wide world of derivatives. Let's say you think the market might dive. You could sell your stock now, wait for it to dip to a low point (as if anyone could accurately guess when that would be) and then rebuy to cash your profits. Or, you could take a "long put" position, which means you buy a contract that gives you the 'option' to sell prior to or on a certain date in the future (generally speaking w/ an American option). So, if the market does dip, then you can 'exercise' your option or sell your option and cash out. What happens if the market goes up? Well, if you sold your stock, then you are really out of luck in the amount equalling the difference between the rising price of the stock and what you sold for (and fees). If you bought the option, then you would only be out the cost of the contract (and fees). If you like this stuff, then check out John Hull's Options, Futures, and other Derivatives (be wary of the math).
However, that is a very market oriented approach. If you are a value investor (think Graham, Todd, Buffett) then you would be estimating the value of the company you are holding and going from there (not as simple as it sounds though). First, you need to analyze the company from a quantitative (financial) perspective and then from a qualitative (think Porter's 5 forces, SWOT, etc.) perspective. Pick your forecast numbers, use a DCF (Discounted Cash Flow) model to derive the present value of cash flows, and then determine if the company is over/undervalued. I'd personally skip Graham and go first to Valuation (don't remember names but they are McKinsey alums).
Hope this helps!
- Finance Grad Student Saving the World |
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Randy G
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Actually, the worst time to sell stock is when everyone else is selling. You will be selling low. I assume that most people sell their stock when a recession hits.
Most people buy stock when it is doing well, and sell stock when it is doing poorly, which means that you are buying high and selling low -- a good way to lose money.
Try reading Ric Edelman's book, "The Lies About Money".
===edit===
Unless the company whose stock that you own goes bankrupt, then the stock price should come back up sooner or later no matter how low it goes.
Hang on to it until the recession blows over, unless you really need the cash right now. |
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Franco
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If you are showing an overall profit, sell and laugh all the way to the bank . Otherwise, put your life belt on and hang on until lthe storm passess. It always does.. |
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coven-m
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it depends on which stocks you own. Some are unfairly battered and will rise, some have low growth potential.
I'd jump out of defense, health care entirely. But Agriculture will stay hot. China's overbought but there should still be stock in India which are bargains. |
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Ted
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It takes two quarters of data for the Economic Research Bureau to call a recession. It takes about a month for the GDP number to be calculated. So, the proper time to sell is 7-9 months before the recession. When "everybody" is talking about a recession we've taken the major part of the hit and it may be the best time to buy. |
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50/50 to 50
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The media has been calling for a recession for the past 5 years, the market has been up around 80% during that time. |
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dreamer2007
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No...market up 2 days straight ! |
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brckr1
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No, hang on and buy more if you have extra cash to invest..Buy into alternative energy sources, solar, wind power, etc staying in is how the rich get all the good deals and become even wealthier....... |
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Joel T
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that's what usually causes the recession is selling frenzies over market collapse fears. |
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William H
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buy on the rumors, sell on the news |
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bleeglewarb
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It depends on what the stock is and how it is affected by recession and down turn. Get advise from a professional. It may be better to hold on as the end of the recession may see it sky rocket. |
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Formerly known as Frank Castle
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There is not enough information to answer your question.
If you email me a list of your stocks then I will help you for free. |
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