The Dow Jones lost nearly 700 points today – another day of huge losses.  Every stock I own is officially in the crapper – down 10, 20, even 40% from when I purchased.  My retirement accounts are shrinking -and so are my mutual funds.  What am I going to do about it?

Do nothing.  Do exactly nothing.

Selling now, while stocks are down, locks in  your loss.  If you sell now then you just guaranteed yourself a massive loss in cold, hard, cash.  Let’s look at it this way.  You purchase stock in a company ( whether an individual stock, mutual fund, or ETF ).  Your moeny is gone – you spent it on that stock.  You don’t own that money anymore – instead, you own a portion of the company.  The stock can go down 50% – but your portion in the company is the same.  If you owned 50 shares yesterday, you still own 50 shares today.

If you sell out now, you end up with much less cash than you started out with – not what you want to do.  Your goal is to make money, remember?  Stick it out.  Don’t watch the news every day – you’re just freaking yourself out.  If it goes down a bit more ( and it probably will ), keep the same strategy.  In time, every mess works itself out – even this one. 

Don’t jump in with both feet

That being said, if you’re thinking about entering the market or adding to your holdings, I might wait a bit longer.  I’m not convinced that we’ve seen the bottom yet – we may be a few weeks or even months away from that.  So keep your cash piling up for a bit – you may see some even better bargains in the near future.