In Down Times, Tune Up Your Portfolio

How did we lose so much in our mutual fund? What should we do now? The conventional wisdom is to sleep on your investments and weigh out the bear. This strategy assumes two things, though. First is that you are guided by an asset-allocation plan that reduces risk through a balanced portfolio of stocks, equity and bond funds, and cash equivalents. Second is that the market fall has not altered those allocation. Now is an excellent time to examine your portfolio to correct imbalances and reduce risk. Following steps can help you be on course. 1. Don't hold too much of a single stock: When stocks rise, investors see little danger in owning too much of a good thing. But during the past year, the market sliced as much as 75% off stalwart stocks as Infosys, Satyam barring few. Too much of anything is your most vulnerable investment. 2. Sell off the stock in plenty: I would recommend selling off a part of stock till it accounts for no more than 15% of your portfolio an

This article was originally published on June 23, 2001.