You read the headline correctly. If there were more space available for the headline, it would have read "Sell Your Home Immediately!"
For people who believe that the present stock market is a harbinger of disaster, the sign of the ultimate decline, the end of retirement as we imagined it, the beginning of personal destitution, the economic apocalypse of Western capitalism or something like that, then you must sell your house this week! At any price. Because prices are depressed and there is no hope for the housing market within the next couple of months. It's all downhill, so bail out while you can.
What fascinates me is how pathetic we so-called capitalists are about capitalism. So many of us are fair-weather capitalists only. In a bull market, whether the stock market or the real-estate market, we love the run-ups. But give us a period of down market, we are not bears, we are chickens.
But chickens behave erratically. Chickens in the real-estate market hold tight unless they are forced to sell. They wait for the return of the market peak, to which they have become entitled.
They see value in what they own, namely, their home, that few, if any, others see in this market. But they are standing pat. It pains them to acknowledge the capital market may have devalued their property.
As I said, chickens behave erratically. Chickens in the stock market are all too ready to pull the trigger and sell as the market declines. They want out of something they don't fully appreciate, certainly not as fully as they appreciate the value of their homes, which are also capital assets.
When it comes to the stock market, the chickens are willing to let headlines in the media guide their decision-making.
Remember that the same essential buy-sell rules apply in real estate as apply in the stock market. If you have an asset you believe has greater value than the market appears to be offering, you can hold out or sell.
In either case, there is always a willing buyer — somebody whose view of the future of the asset differs from yours.
You are disinclined to sell your house today because you appreciate its value and are confident enough to disregard the bids that are coming in. On the other hand, you don't know the stocks you hold well enough and are easily persuaded by the media that selling now is the best way to salvage your account.
But don't forget that somebody else out there is buying what you sell and that person just may know something more about the future prospect of what you are selling than you do.
Warren Buffet has stated that if you are not willing to own a stock for 10 years, you shouldn't own it for 10 minutes. Know your stock holdings as well as you know your own home and its place in the market. Or get help from a professional to evaluate the appropriateness of your stock holdings, if you are not confident whether you should hold or fold.
Recognize that if you are tempted to sell your stock holdings because the market is down right now, you should also be prepared to sell one of your other capital assets, namely your home, because the market is down right now. Pay no attention to future prospects.
Base your decisions on conditions today alone and act as if things will only get worse, in both the stock and housing markets. Sell your home today!
Or, if you don't, explain why you'd even consider selling appropriate stocks today because of the bear market, which is really bullish on chickens.
Donald E. Askey is a certified financial planner professional and a registered investment adviser with Provident Financial Advisors, at The Provident Bank in Amesbury (5 Market St.) and Newburyport (66 Storey Ave.), and a registered representative offering securities through Commonwealth Financial Network, member FINRA/SIPC. For your money-related questions, write planning@providentfinancialadvisors.com or call 877-815-8500.
