During Market Corrections, Just Sit Tight
By
Timothy W. Lutts, Chief Investment Strategist and Editor of
Cabot Stock of the Month ReportOver ten years ago in March 1996, the Page One title of our
Cabot Market Letter said, “Just Sit Tight.” We were in a bull market, and all our indicators were positive. But the market had been correcting for about a week, and some of our aggressive stocks were breaking down. We wrote, “Sit tight. Hold onto your winners. Sell your losers.”
And that’s exactly the advice we continue to give today. No market goes straight up day after day; its job is to keep you off balance. So it must plunge from time to time, before resuming its advance, and it’s your behavior in these plunges that determines whether you’ll emerge a winner or a loser. Our advice today, therefore, is little changed from our advice in that great bull market of a decade ago. Sell your poorest-performing stocks now. And become fully invested in healthy charts as soon as the current correction ends.
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