Should I sell this stock, or should I hold it.?

Question

I have been investing for about a little more then a year now, so I am not what you would call an experienced investor, though I have read several books and read several articles about investing. (Don't worry no get rich quick stuff, just useful stuff like how the market works, all the terms used, what is a bear market, what is a bull market, basically the fundamentals of investing). I have been holding onto this stock for a couple months now, the company is doing okay, it has positive growth, and has a reasonable P/E ratio, but the stock price has tumbled from around $53 to around $42. The company has been making smart moves, no bad stuff that I am aware of, so I figure that it is falling because the rest of the market is down as well. I am still in high school, so I am not out to make money for retirement, it is more of a test run for when I am older so I have plenty of time to ride it out if necessary. It is a bank...

Answer 1

/ Ride it out!  Human nature (selling when stocks plummet, and buying when stocks are high) can be devistating to personal portfolios, but history repeats itself.

Most stock P/E ratios quickly fell well over 8%, so you are not alone here.

This is the time to buy more of that bank stock if you still like it.  Think of how many shares you can get at a bargain right now, and you are young enough to see them grow strong before you retire.

Eventually, the market will correct itself, and prices will go up again.  Most likely, you won't take a loss if you hold on to it.

Simply put.. Buy low / Sell high.  Warren Buffett says, "When investors get nervous, I get greedy.  When investors get greedy, I get nervous."

Last year (Bull Market) was a great time to sell, not buy.  These (Bear Market) are great times to buy, not sell.

Here's a tip - Consider investing $2,000.00 (at your current age) in a "Roth I.R.A."  Leave it there, and never take it out.  By the time you retire, you will have close to a Million dollars, maybe more!  Ask any of the top Investment Brokerage Firms about doing that.

Answer 2

Hey Bermuda!

Great question and terrific to see that one of such tender years knows so much about investing.  Ok ... your question.

Depends ... depends on the bank stock.  If you still believe that this company has sound fundamentals, AND clever management (as opposed to idiotic ones), I'd hold it.  I'd hold it because you don't have a "loss" until you sell it.  AND you are young enough to ride it out.

However, if it is one of those banks that destroy wealth, sell it.  Take the loss and take your remaining funds and invest in something that will produce some growth over the next few years.

I do think that by mid-2009, we will see some strength returning to the good bank stocks.  If you want, e-mail me with particulars, and I'll check it out for you.  Good Luck!

Uppity Wench

Answer 3

who cares

Answer 4

Heck. In the last year darn near every stock is down 11 points unless it is an oil, fertilizer, or oil drilling stock.  If you are satisfied with the company, you might consider this a good time to buy a little more.  Not too much.  it could drop another 10 points before everything is over with.  It could drop 20 points more.  Geez, the economy is in absolutely miserable shape.