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Are You Guilty of Panic Selling?

'Fess up if you are. Don't feel bad, though, as many investors let their emotions get the best of them and resort to the SELL ALL button on their trading website.

The urge usually comes the night before. Many times it occurs after a weekend of bad news or after a lackluster after-hours report.

I have been a professional money manager over the last 18 years, and I can usually tell who is going to call and when they are going to call to hit the panic button. These nervous types represent about 1% of my clientele, even after I have tried real hard to get that number down to zero.

I am not saying that selling everything is unwarranted in every situation, however. It depends upon what you own. This last Monday was a very good example. More bad news out of Europe over the weekend and before the open of the market led to about a 200-point selloff.

I received one panicked message on my cellphone late Sunday night. I listened to it on my way to work before the market open on Monday. It was from one of my usual suspects and it came during a very typical period of time in the market-high volatility.

The problem is that the markets are almost always volatile. It seems that there is always some wall of worry to climb somewhere. If is not the latest jobs report in the U.S. then it is the rising interest rates in Spain.

How does one learn to handle volatility, and is it wise to hit the panic button and sell everything? Again, the answer is very logical. It depends upon what you own.

I went through all of my holdings on Monday, just as I do every other day. I usually own about 25 stocks in the portfolios that I manage. By the way, my aggressive portfolio is now up 14.1% year-to-date, while the Standard & Poor's 500 is up just 6.2%.

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