When to Hold and When to Sell

Eleanor Laise of the Wall Street Journal discusses services to help investors with exit strategies in her recent article, “How to Know when to Hold, When to Sell”.

Recent market volatility has made many investors wish they had a solid exit strategy in place. Many of last year’s star ETFs are now in a slump. This has investors wondering how they could have locked in gains and avoided some losses. iShares FTSE/Xinhua China 25 Index (FXI) and Market Vectors Gold Miners (GDX) funds both stand out as big winners last year and big losers this year.

Smartstops.net is a new service that helps investors decide when to sell an ETF. Users can sign up to receive emails with suggested exit prices and receive alerts when their funds drop below a certain exit price. According to SmartStops’ director of analytics, Chuck LeBeau, if a stock or ETF “falls far enough and fast enough, it’s probably going to continue.”

Investment research firm Morningstar takes a different approach to calculating a selling price by first determining fair-value estimates for the underlying holdings. These estimates combine with the ETF’s volatility to help produce a suggested exit price.

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