OFF THE WALL: Should I stay or should I go now?

By Rene Pastor

Should I stay or should I go now?
If I go there will be trouble
And if I stay there will be double

The English band The Clash wrote this ‘80s hit song over a girlfriend, but it may as well be the raging anthem of the stock market.

The budget battle over defunding Obamacare and raising the debt ceiling has created a state of panic anxiety for market players and investors like myself. Do I turn share positions built up over several months into cash just in case Capitol Hills goes nuts? Or do I hang tough, ride it out with shares because the businesses they represent are doing well?

After the recent rally in the market, I am up about 15 percent on my holdings. With the deadline on the budget coming up September 30 or October 1, the question bouncing like a pin ball inside my head is summed up in The Clash song.

The smart guys in the room would say sell off part of your positions in stocks up over 20 percent. That way, if the stocks sell off you can jump back in and buy more. Their reasoning makes a whole lot of sense. The beauty of cash is that its value does not erode. You lock in your gains and this gives you the leverage to buy more stocks when the market drops anywhere from 10 to 20 percent.

The problem with that approach, however, would be if they reach a deal in Washington on both the budget and the debt ceiling. With the Federal Reserve spigot to support the market still wide open, you may be selling shares that are poised to rally and there goes your chance to buy them on the cheap through a pullback.

See? Should I stay or should I go now?

Like most small investors, my biggest problem is I do not know when to sell. I like the idea of being able to hang on to a share forever, which for me is at least 7 more years before I can begin withdrawing from my IRA account or 18 years which is when I turn 70. I think it was Warren Buffett who is a big fan of stock investing forever. I’m a little like that too. I would be extremely reluctant to sell Apple or Google, Johnson and Johnson or Visa, Blackrock or Lockheed Martin.

Even if there is a sell-off next week because of stalemate inside the Beltway, maybe the question I should be asking is whether the biggest positions in my portfolio are keepers worth hanging on to.

Would I sell my shares in a biotech company that is poised to win FDA approval any time soon? The professionals would say yes, get out now and play it safe. My gut says no. The instinct, and a lot of times that is all you have to go on, says don’t lose your nerve and panic-sell your holdings.

I am staying for now. But when you see me chewing my nails you know, I’ve made the wrong call.

‘Off the Wall’ is a weekly column on the stock market. The comments expressed here are the author’s personal views and are not meant to recommend the buying or selling of stocks.

red line

Leave a Reply

%d bloggers like this: