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Want to Sell? Don't Look to Buttner for a Blessing

I know what you want me to say.

Sell.

And I think I know why. So much of investing is psychological as well as financial -- it gives us some comfort to DO SOMETHING at a time when the market seems to be doing so much.

Yeah, sell. It has a nice ring during times such as these. Forget all that long-term talk about stocks performing better than other investments, about buying low and selling high. Our fingers, sweaty for sure, are just itching to pick up the phone and call our fund company, grab the mouse and make a trade. Sell, dammit!

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Hold on a second.

Yeah, it's ugly out there. Yeah, your mutual fund is likely seeing red so far this year -- as are you, for not heading for the exit doors sooner. Yeah, the headlines are screaming, "Market Meltdown!" Chances are you're yelling even louder when you check out just how much money you lost Monday.

Yeah, the question at cocktail chats these days is not "How much you up?" but "When'd you get out?" And yeah, the bear isn't just growling -- he's at the door, and who likes his smell one bit?

So, OK, go ahead, sell.

But that's no blanket statement. Sorry, I'm not here to win a popularity contest. I'm here to remind you of things you probably know in the back of your mind but might like to forget as fear starts to replace greed on

Wall Street

, as panic takes the place of better judgment.

So, sell. There are good reasons to get out of your mutual funds if your money shouldn't have been in the market in the first place. If your time horizon is fewer than three years, and you couldn't resist hanging on to grab some more gains; if you need the money to finance a downpayment next spring; or pay for your college freshman's sophomore year.

As for your emergency fund? You know, the money that will pay for those unexpected turns in life, the leaky roof, broken transmission, or your basic expenses in the event that the ax falls at work. Now you've learned that doesn't belong anywhere near equity funds. Get it out now.

And sell if you thought you knew what "risky" meant, if you thought you knew how much risk you can handle, and are now discovering that stock funds don't always go up.

There's no reason that your portfolio should have you up every night, worrying. It's an expensive lesson for sure, but now you understand why it's important to not only to check out the risk measures of any fund you're considering, but also have a good feeling for how much you can tolerate. (If you missed my primer on that subject, it's not too late. Check it out in the

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Schoolhouse.)

Use this opportunity to get rid of the parts of your portfolio that leave you sorry and sleepless. Perhaps you bought the latest Internet or tech fund, dazzled by the numbers they delivered last year. Now, you're saying, "Ouch!" Trim.

Or if you still like the long-term prospects for the sector, switch to a more diversified fund with a manager unafraid to take a stake in technology but who has proven he or she knows how to ease in and out when appropriate.

Sell, too, if you've dramatically revised your outlook for the market and you think you know exactly when to get back in. Yes, if you believe the bear has firmly settled for the next few years, you'll make money by going to bonds or money market funds, then buying just as it starts to recover. But your crystal ball better be in good working order for this one, and you better be darned sure of yourself.

I know I'm not smart enough to do this. And so I say, if you didn't misjudge your time horizon or risk tolerance, hang tight still. I am. With my time horizon of 15 years for my mutual fund money, I see no reason that I shouldn't bet that stocks will continue to do better than other investments over that time period.

That is, of course, not to say that I don't think things are scary out there. Nor is it to say that I only buy and never sell.

At the end of last year, I sold (and took a loss) on a fund that underperformed its peers for more than a year. I will also sell if a manager dramatically shifts investment style.

I, too, look at fundamentals and will move from one sector to another if my long-term view changes. (I did this at the end of last year -- selling my emerging markets funds and making a more broad-based bet on Europe. But this was not done with the next few months or even the next few years in mind. I simply thought the European stock story was much more compelling than the Asian one over the long term.)

A couple more reminders as you start to get caught up in the sell frenzy. Remember that while everyone is focused on what's happened so far this year, you probably shouldn't.

Yes, the average mutual fund is down for the year, but unless you got into the market for the first time at the beginning of 1998, don't pay as much attention to year-to-date numbers as you do to your portfolio's progress since you first started investing.

Check out some of the top-performing mutual funds for the past three years and you'll still see double-digit returns. Even if you weren't lucky enough to get into a, say

Weitz Hickory

, chances are you are still up, and handily.

And remember why you got in in the first place. That return on a money market fund, though safe, isn't gonna put Junior in college or get you out of the office at age 62.

Yes, things have changed, and I haven't started buying. I'm worried that there is still much that is unresolved overseas, and that the earnings picture is not yet clear. And I'm concerned that the major prop to this market -- the small investor -- may start spending more time trying to predict what happens in Russia over the next few months, rather than viewing where he wants his portfolio to go in the next 10 years.

But if you want a blessing to "sell" all you've got, pick from among the pundits. I'm afraid I can't oblige.

* * * * *

Are you a stalwart like Buttner? Or do you think she's got it all wrong? She welcomes your

email, or, you may post on the Brenda Buttner message board on AOL in the

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forums, keyword: thestreet.

Brenda Buttner's column, Under the Hood, appears every Thursday on TheStreet.com. This is a bonus column. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or funds.