The view expressed in my last post goes doubly now. The group of mostly tech stocks I bought in early 2009, which were up 300+% by the end of last year, are down near the original purchase prices now. What does this mean? It means that an exit strategy is an important component of any investment strategy.

There was a time I believed that holding stocks over many years always produced a favorable outcome. That may have been true at one time. In our current economic environment, even when analysts have a favorable perspective on a stock, it may not be enough. Two of the stocks that I have lost big on still get a very favorable report from the analysts who follow both. Just as they did a year ago, they suggest buy, buy, buy.

Even those speculating in the options market like the stocks.  Problem is that they will likely continue to fall.  Psychology still trumps everything else in the market and the current mood is not good.

Bottom line……..don’t hold and hope……..when your value has dropped 10% and it is not just intraday volatility…………it’s time to consider bailing while you can. Feel free to ignore this approach. Just make sure to come back here in 6 months and reread this post. If I’m wrong, please comment. There are times it is good to be wrong.