When Your Account Is in the Red

by Stacy Francis, CFP®, CDFA

A lady I met last night while I was waiting for my husband to arrive at a restaurant was intrigued that I am a financial planner. As usual I typically get questions about their personal investment and/or finances. This case was no different. She confided in me that the red in her investment account is keeping her up at night. “What,” she asked, “am I supposed to do? I can’t sell because my investments are all down, but they just keep falling. It’s a total nightmare.”

“What you’ve got to ask yourself,” I told her, “is how you feel about your stocks and funds. Do you think they’re going to do well in the long run, or have their fundamentals changed so that you no longer believe in them?”

Because when it comes down to it, holding equals buying. With any investment, historical prices are irrelevant. It doesn’t (or shouldn’t, anyway) matter whether the stock you own that is trading at $5 per share was $1 last week, or $30. If you would buy it at today’s price, you should hold it. If you wouldn’t buy it at today’s price, you should sell it. If the reason for your lost shuteye is that you no longer believe in the company, sell it, and chances are good you’ll find that lost peace of mind. If, on the other hand, you still like the company, and the reasons you trusted it with your money are still there, try to look at it from a wider perspective. Both the economy and the markets go through cycles of ups and downs. If the company of your choice is truly great, sooner or later your investment will pay off.

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