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IBD: Should You Sell Or Hold Your Mutual Funds In A Bear Market?

TedTed
in Fund Discussions
FYI: s an investor, you know the stock market is cyclical. But intellectually understanding that bull markets are followed by bears is not the same as actually living through a Wall Street crash and watching the value of your portfolio decline, sometimes sharply.

That’s when a mutual fund investor’s discipline and patience can get tested — but also rewarded over time, as the performance of the Best Mutual Funds 2016 Awards recipients shows.
Regards,
Ted
http://www.investors.com/etfs-and-funds/mutual-funds/should-you-sell-or-hold-your-mutual-funds-in-a-bear-market/

Comments

  • hawleyl
    I utilize an asset allocation scheme where I periodically rebalance my portfolio. A rebalance effectively implements a buy-low sell-high strategy. The answer to should you sell or hold depends on the rebalance operation which would sell if your current allocation of a mutual fund is larger than the target allocation for that fund. This strategy requires a belief in the concept expressed in the link as:
    As IBD founder William J. O’Neil wrote in his classic book, “How To Make Money In Stocks,” “a well-selected, diversified domestic growth-stock fund run by an established management organization will, in time, always recover from the steep corrections that naturally occur during bear markets. The reason mutual funds come back is that they are broadly diversified and generally participate in each recovery cycle in the U.S. economy.”

    Now for a discussion question: Should a rebalance operation occur as a result of market timing, e.g. a fund’s allocation exceeds its target by some amount; or as a calendar event, e.g. once each year in a given month?
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