facebookGiven the recent Fed's announcement, should I sell 50% of my stocks and buy them again at a low after the rate hike? Why do some people still insist on holding on to their stocks if they can profit ? - Seedly

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Anonymous

06 Jan 2022

General Investing

Given the recent Fed's announcement, should I sell 50% of my stocks and buy them again at a low after the rate hike? Why do some people still insist on holding on to their stocks if they can profit ?

I understand that the fundementatls of the stocks are good so they are still holding some stocks but still why not earn a profit?

Discussion (11)

What are your thoughts?

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Every transaction has a cost.

Unless your broker doesn’t charge commission for each transaction, then the more transactions you do will have higher costs.

I think the most common answer to this is that most people prefer to hold onto their assets because most people acknowledge two things:

1) Over a long enough time horison, holding typically outperforms trying to trade short term trends

2) Most people do not have the skills to trade short term trends or macro trends

Power to the day traders but most market participants aren't that. Don't over invest or get over exposed. Don't be a forced seller because the market went against you.

Of course some people just fall in love with their positions and can't sell even if reality is screaming otherwise to them but with a responsible portfolio size and patience, its better to find something else to do while the market sorts itself out. Especially if your assets pay dividends or generate income.

A rate hike does not gurantee the stock market will go down. If it's so obvious, all we have to do is borrow on margin and take a leveraged short postion x9999999 and we will be billionaires next week.

Unfortunately the market does not work simply based on outcome of 1 or 2 events.

But how do you know that stock prices will fall after the rate hike? What if it rallys a little higher after you sell them? No one can time it. There has been many instances of the Feds increasing interest rates and stock price continues to rise.

You can profit now but as long as the companies I am holding have strong fundamentals, I would rather not give up opportunity costs if the share price do bounce back up.

Also, if you sell to recieve your profits now. What will you do with the money? I will only sell if I can see an opportunity in other stocks. In the meanwhile, I'll just add into my existing positions who I deem undervalued and just ride it outttt.

Because i can't and i don't want to monitor stock price movement and news daily. rate hikes or not, ...

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