How’s Business? Breaking even

By Joe Palumbo III

The philosophy of breaking even is probably one of the biggest unknown pitfalls for investors. First off, don't feel bad if your portfolio is down. The reality of it is the majority of the planet is down, and there are no sure things or crystal balls to bail out the overall decline we are still mired in. If you are one of the investors who chose the technology sector, then chances are you are still feeling most of the pain. Suppose you purchased an issue that is down somewhere in the neighborhood of 62 percent (which unfortunately is not uncommon) over the last 18 months. If the general tide of the market rose a consistent 15 percent annually, this means it would take you about seven years to break even. This is when you ask yourself “what is my financial outlook?” Be aware that the time you spend waiting and hoping for a strong push on your position can actually hinder you from investing in other areas that would show you a better return on investment because your liquid assets are tied up in stock not producing for you. Now if your positions are in blue chips that depreciated say 15 percent and your outlook is based on a long-term strategy, then you may want to wait it out. However, if you are an active trader, there comes a time when you must lick your wounds and move on. So how's business in terms of breaking even on your stock positions? The bottom line in the end is whether or not holding on to your position will interfere with your future growth and progress. Take a personal inventory of what you are willing to stomach in the attempt to create newfound life in your investment portfolio. Joseph J. Palumbo III is the managing director for the Palco Group Inc. The Palco Group deals in asset management, private finance funding, and business consulting. Palumbo can be reached at palcogroup@aol.com or 718-461-8317, 516-297-4034.

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