Dividend Investors Need Sell Rules, Too
by Stuart Chaussee
If you like blue-chip, dividend-paying stocks, you may find it disconcerting that these so-called conservative investments can be extremely volatile. On any given morning, you can wake up and find significant unrealized losses in some of your positions.
True, a diversified portfolio of dividend payers should be less volatile than the market itself (the beta is generally lower than the market's), and perhaps even beat the market over the long haul. But that doesn't mean your portfolio is immune to some serious hits from time to time. So the all-important question is, if every stock carries significant risk of loss, when do you admit defeat and take your loss?
This is a really tough question, especially for those who consider themselves long-term, buy-and-hold investors. You know how this works: You buy a stock and before long, the position may already be 10% or 15% against you. You...
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