Never Sell Into a Panic

Is this the end of the bull market, and is it too late to sell?

Having received more than a few emails asking that question, it's only fair to give an honest response. That is: "I really don't know." And no one else does either. The fall-back position is that old Savage Truth: "Sell down to the sleeping point." But never sell into a selling panic.

No market goes straight down. There's bound to be a "bounce" -- somewhere. That's when your self-discipline will come into play. Then there will be a huge temptation to just give a sigh of relief and forget the pain of a couple of huge down days. Just as there is currently the temptation to cut and run.

Over the long run -- at least 20 years -- history says you'll come out ahead with a well-diversified portfolio of stocks. But we each have a different time horizon and a different risk tolerance. That's why you have to take a step back and assess the reasons for this market decline, your current positions and your ability to stay calm under the mounting pressure of losses.

And that's where "chicken money" comes in. Of course, regular readers of this column already have their quotient of "chicken money." That's Treasury bills (bought online through TreasuryDirect.gov) as well as short-term, FDIC-insured bank CDs and money market deposit accounts.