Wachovia shares - hold or sell?

Question

I have about 5% of my non-retirement net worth in some shares of WB. It's not a lot of money and I don't need it to pay down debt or buy anything right now. But with everything that has happened in the past few weeks I'm concerned about my position.

I've lost about 40% since I've purchased it. If I sell it I'll have a nice write off on this years income tax. If I hold my position I stand to lose potentially most of it if there is a takeover (or perhaps takeunder like BSC). If I do sale I'll use that money to fund my spouse's ROTH contribution for the year without having to dip into our cash reserves, although that isn't a big deal given my financial position. But my main concern here is how long do you think it will take these shares to get back to $40? Would I be better off just taking my losses now or just sitting on it for a few years since I don't need the money anyway? Hopefully some of you guys out there will give me brain a new line of thought on this. Thanks.

Answer 1

I would take off 1/2 to 2/3 of your position off.

Can I just say it has been a losing trade for a year. Why on Earth weren't you more active in monitoring you investments?

Teach yourself about the market and monitor your portfolio actively. Passive investing isn't efficient. You will make money in the long run but riding it up and down taking the profit off all the way works far better. What I like to call "the money tree." There are several stocks here in Australia I do that to.

I would leave an amount of money in the stock as it has been (in my opinion) beaten down unfairly on no consequential news stream.

Take an active role in your investments.

I am and I'm 22. I have much less to worry about.

Oh and get this straight LEH is not another BSC.

They are actually surprisingly well placed. Market hysteria has been rife and I think when LEH take steps to capitalize (don't worry about dilution)  the markets will applaud as the all the bad news is fully priced in at these levels.

Catch some or all of the upswing.

If you want any more help don't hesitate to e-mail me.

:D

Answer 2

I would harvest the tax loss and if you want to stay in the financials for the eventual recovery, replace WB with XLF, the ETF for financials.  You would then have a tax loss and now have a diversified portfolio of beat up financials.  Or you could find an ETF more closed aligned, like a bank/thrifts fund.  I would use the broader XLF myself as the banking industry is now facing more credit card problems, and home equity line of credit problems, along with reduced loan demand.  It will likely take some time to get through all of this.  XLF also includes brokers, insurance stocks and more .

Answer 3

That is a very tough call to make.  I had a similar call when BAC decided to bail out Countrywide.  I sold.  I remember how Cramer said what a wonder move WB made by buying Golden West.  That was just last year.  Doesn't looks that wonderful any more.  

I would not wish to own WB now.  Much, much too much risk.

Answer 4

Sell