Trimming PROFIT (gains) is never a bad thing to do.... particularly if you're re-investing and diversifying with those captured gains. Just remember that you're triggering a taxable event.
Now then ----- I've stated 100 times in this thread.... another overused and often stated:
"when interest rates rise the stock market dies"
In other words -- just like HOUSING PRICES will do -- when interest rates climb to some ARBITRARY RATE - at some point prices must come DOWN when Interest rates rise or they become unaffordable (on a monthly payment basis).
Stocks come down to constantly adjust the yields to reflect current (future actually) thinking. If MONEY can earn X other there -- and it's more than MONEY can earn here - people sell and move the money. Simple. There MUST BE a correlation between price paid and return on investment. EVERYONE is looking for the same thing. It's not magic!
If you're in to 3% or 4% and less dividend payers -- and you'd bought them last week --- you're going to take a hit!
But if you bought the shares months ago -- or a couple years ago -- then you're still collecting a very nice % dividend yield on YOUR COST BASIS.... and when the price of the shares drop - your reinvested dividend will buy more shares.
Now then ------------- LOOK AT YOUR COST BASIS.... compute YOUR dividend return rate..... and if the shares are UP 25% and oh gee! Heaven forbid your shares declined 4% on Friday..... Really?? You're worried about that?? If you sold now ---- and then realized you have a bunch of cash but no investments earning money --- and now you get back in -- you've just paid inflated prices for the "new" shares.
WE ARE NOT THE BIG MARKET MOVERS AND SHAKERS -- WE ARE NOT TRADERS -- WE ARE INVESTORS. We should see a market decline as opportunity to add to our nest egg.... not RUSH IN... but pay attention and tip toeing in constantly is going to serve you well years down the road.
Remember to go to the charts and stretch 'em out and look at all the squiggles in the line... oh yeah -- that's it! They represent price movement up and DOWN... but it's the general long term TREND that's important. Not todays news.
|