Investors who were basking in the early summer glow of a stockmarket heat wave would be forgiven for feeling mixed emotions about the recent cooling in equity prices. The FTSE All-Share completed an impressive 1-year gain of 30% when it tipped over 3,600 points in May but it’s now more than 7% off that high, leaving many wondering whether a deeper correction is unfolding. While the recent falls are a tonic for market-watchers concerned about unsustainable rises the current conditions perhaps warrant a closer look at portfolio positions to ensure they aren’t harbouring expensive stocks that now look decidedly risky.
Timing a sell decision
We have written at length about the difficulties of deciding when to sell shares and why investors focused on technical and fundamental indicators often see things differently. As part of that decision making process – and after 12 months of strong gains – now is the time to put your shares through a mid-year financial work-out to figure out whether their original appeal still exists. Finding out which if any of them are beginning to look overly expensive against their fundamentals could be an indicator of those that are needlessly exposed to further stock market falls….
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