Everyone's heard the one about the stock inherited from
grandma that began as a few measly shares and, through dividend
reinvestment (and divine neglect), is now worth hundreds of
thousands of dollars. The stock shares are like the Energizer
bunny...they just keep going and going, and presumably they always
will. Or will they?
Whether you're holding shares of a tobacco company, a
soft-drink purveyor or a software developer, if this is the
dominant position in your portfolio, consider selling a few of
those shares and diversifying. (Before you do, however, be sure to
check with your tax advisor.)
It's a strange but common phenomenon that the person doing
the selling usually values an item at a higher price than the one
doing the buying. If you're holding shares of a stock because
you can't bear to part with them, consider what might happen if
their value were cut in half. If such a situation wouldn't be
devastating to your finances, hold on, but if just the idea of it
is making you sick, lighten up your position.
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