Q: My question has to do with selling shares due to the "opportunity cost" of continuing to own them. As we go through tumultuous times, we are being coached by you (and many others) to stay the course, maintain a diversified portfolio and remain with companies that have not experienced fundamental changes to their businesses. Supporting this thesis is that you can't time the market and a good company is a good company - until it is not.
But then on the other side we seem to have situations where stocks go down for no apparent reason, other than investor irrationality, and they then seem like excellent buys. This is where the question of opportunity cost arises. I own BDI, SYZ, BAD, AVO to name a few stocks that are down but continue to be largely viewed as good companies (ok, maybe we should have left AVO out of this). But are we investors suppose to contemplate selling these stocks because it appears that it may take a year or two for them to come back, hence the opportunity cost, to buy things we think will rebound faster? If so, isn't that then trying to time the market? It seems to me that while I am eager to buy up some "bargains", I am fully invested and am not adding to my savings and therefore I do not have the cash, so I will just have to sit and wait for this market to rise again. Or am I being too doctrinaire and making the amateur mistake of not selling my losers?
Sign me a little confused! Appreciate your insight.
Paul F.
But then on the other side we seem to have situations where stocks go down for no apparent reason, other than investor irrationality, and they then seem like excellent buys. This is where the question of opportunity cost arises. I own BDI, SYZ, BAD, AVO to name a few stocks that are down but continue to be largely viewed as good companies (ok, maybe we should have left AVO out of this). But are we investors suppose to contemplate selling these stocks because it appears that it may take a year or two for them to come back, hence the opportunity cost, to buy things we think will rebound faster? If so, isn't that then trying to time the market? It seems to me that while I am eager to buy up some "bargains", I am fully invested and am not adding to my savings and therefore I do not have the cash, so I will just have to sit and wait for this market to rise again. Or am I being too doctrinaire and making the amateur mistake of not selling my losers?
Sign me a little confused! Appreciate your insight.
Paul F.