What To Do With Your Declining ETFs
March 1st at 9:51am by Tom Lydon
U.S. stock-index futures plunged at the opening by more than 2%. As an investor, what do you do? Having a sell discipline is very important to portfolio protection and mental sanity. Our simple rules are to sell any ETF position that drops below its individual 200-day moving average or 8% off its most recent high.
Following these rules may generate some trading this week, but will also give a little peace of mind if the market continues to deteriorate.
The S&P 500 has gone four years without falling 10 percent
from a recent high. The last double-digit percentage drop, a
common definition of a market "correction,"took place from
Nov. 27, 2002, to March 11, 2003. Since then, the benchmark has climbed as much as 82 percent.
Last week, it reached a six-year high and the Dow average closed
at a record.
