By Maxine Shapiro, KERA 90.1 commentator
Dallas, TX – I received a most interesting call yesterday. A good friend of mine, a former financial advisor, not living in Dallas, in an almost defeated yet frantic voice, asked me what he should do about his portfolio. I'm Maxine Shapiro with KERA Marketplace Middays.
How intriguing. He wanted my opinion, even after years of being in the market himself. He wanted to know what I thought he should do. First off, he knows I don't give personal advice, but he also knows I am not short on opinions.
So, like any good therapist, I answered a question with a question. "Are you losing sleep at night?" I am a huge proponent of sleep and knowing one's own risk tolerance level. When we invested in our mutual fund just two and half years ago, none of us could have imagined that terrorist attacks and billions of dollars worth of company fraud would be moving the market. There was no risk three years ago. Markets went up, period.
We now know the risk, only too well. I highly suggest that when you open up your second quarter statement from your fund managers, you do so with a glass of wine in your hand. It's not going to look good.
So, should my friend or anyone bail out of their mutual fund? With a sober unemotional mind, take a good long look at the stocks in your fund. How comfortable are you with these companies? How well do you know them? If you don't care and are still losing sleep, take the money. It's always your choice. There are many more conservative ways to invest. But if you're young and you're committed to long-term investing, then make a decision and don't look back. And that goes for sellers as well. No regrets. The news has been hard lately, very hard, so make sure it's not an emotional move.
Will we ever see those double-digit profits of the 90's again? Probably not until corporations clean up their act. But I can almost guarantee you, the day I get out, the market will rally and no, I won't tell you when I'm getting out.
Please have a safe, healthy and happy Fourth of July. For KERA Marketplace Middays, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 P.M.