wearmanyhats

There are rarely times when you should sell certain stocks, because even though they’ve taken a beating,  they will go as low as the bank stocks are now.  However, there is enough warning to protect yourself, even if you have to take a loss.

The two industries that will take the next big trollop will be life insurance and credit card companies.  If you hold any of these, now is the time to take your losses or decide to take the risk of riding out the bad times for the next twenty years.

The credit card industry is fairly understandable. Money is tight and people who have lost their jobs can not make their payments.  Think about being a credit card company at this point, and consider if people lose their homes, and just walk away from everything they have had, most likely that credit card will be one of the responsibilities that will get dropped as well.

But what about insurance?  Why would that suffer now?  Consider the cuts that have to be made from people’ budgets.  Although the breadwinner may not like the idea of leaving his family destitute in the case of his/her death, the fact is that if someone has to make a choice to pay the bills or drop the life insurance, guess what goes? Expect life insurance companies to lose quarterly earnings next month in a big way.

If there are insurance stocks in your portfolio that have been holding its value fairly well, and you are comfortable in keeping the stock, set a sell limit and adhere to it strictly.  Then you can reserve the money you will put into it when this economic downturn stops.

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