A warning by the Fed today about yet more Wall Street turmoil only stresses the fact that when it comes to exchange traded funds (ETFs), you need to have an exit strategy. We’ve said it many times before, and this probably won’t be the last time you hear it.
Jeannine Aversa with the Associated Press reports that the Fed’s No. 2, Donald Kohn, said that the improvement in market functioning has been a bit undone by the increase in volatility. Things seemed to be getting better in late September and October, but now Wall Street is worried anew about the housing and credit markets.
As things continue along the rocky up-down cycle, it’s a good time to review your exit strategy. We use the 200-day moving average. If a holding dips below the average or 8% off its high, we sell to prevent further losses. Whatever strategy you choose, sticking to it is paramount!
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.