Should I Liquidate My Stocks?

Unfortunately, despite extraordinary measures by the leaders and politicians in an effort to stimulate the economy and get it back on track, the measures have fallen short.  The economy continues to struggle and it's beginning to look like the early innings of a full economic depression rather than a typical short-lived recession.

As investors see the economic data, they are continued to be skeptical on where we're going.  They worry about another market crash similar to the fall of 2008.  Could it happen again?  Absolutely, and it's important to take measures to protect yourself and your money.

Depending on your current financial situation, you may decide to sell your entire portfolio.  If you need the money in the near future then it's definitely a possibility.

For most of you, this isn't the right move.  So what are some ways you might be able to protect your portfolio without unloading everything?  Consider the following:

1. Consider selling some of your winners - Paper profits are meaningless and it can be wise to ring the register on some of your winning stocks.  By downsizing some of your positions, you protect yourself against future loss.
2. Focus on dividends - Dividends are money in your pocket and can really help cushion your portfolio against a loss in share price.
3. Consider using options - While this is an advanced strategy, you can use options to hedge the risk in your portfolio.  For example you can sell a put option on your winning positions, or perhaps you can buy some VIX calls which will explode in value should a stock crash occur.

Make sure you run any and all of these strategies by an expert financial advisor or professional.  Trading stocks can definitely result in a loss of money so be very cautious and do your own due diligence.