Let's talk investing Q&A

Q:

What are some things I should consider when I’m deciding whether to hold on to or sell an investment?

A:

For starters, you’ll want to determine how the investment is performing compared with similar investments. Checking your investment’s returns against an appropriate benchmark index over one-, five- and 10-year periods, if possible, will tell you if and how often your investment has outperformed, underperformed or matched its benchmark.
Then think about how your investment fits in with the other investments in your portfolio and determine whether it’s filling the role that you intended for it. If it is, great! If it’s not, you might want to consider a different investment.
Taxes are another consideration. Will selling the investment result in a capital gain or a potentially deductible loss? While taxes should never be your sole reason for selling, you may be able to use a gain or loss to offset gains or losses on another investment.

Q:

A few of my coworkers like to speculate on when the next bull or bear market will be. What makes a market a bull or a bear?

A:

Generally, a bull market is represented by rising securities prices over a prolonged period. Investor optimism and confidence that strong performance will continue typically accompany a bull market and frequently signal a strengthening economy.
A bear market is a decline of 20% or more in any broad equity index — such as the Dow Jones Industrial Average, the S&P 500 or the NASDAQ — generally lasting 60 days or longer. An economic downturn may cause investors to lose faith in the market, decreasing the demand for stocks. If the market downturn lasts less than two months, it’s generally considered a correction rather than a bear market.
Long-term investors may be less affected by a bear market, since they generally have more time to potentially recoup any losses.