When To Sell a Fund?

Recently (December 2009), The Sensex has again touched 17,000 level back. And I started receiving queries from the several people that,

- Sensex has again gone back to previous levels. And I made some profit. Should I Sell my Fund?

Ok. Now, let us discuss the another scenario. Just few months back, Sensex was all time low of 8000 level and I was receiving queries like,

- Sensex has touched Bottom and I made this much of loss (Which is On paper only). Should I Sell my Fund?

Ok. Now, Let us discuss one more scenario. Once upon a time, Sensex was stable and people used to asked me,

- Sensex is stable. I have neither made any profit nor made any loss. Should I Sell my Fund?

Well, I really don’t know that What’s wrong with you people. Why do you always ask me in every kind of market situations and Economic cycles that, “Should I Sell my Fund?” I mean why do you always want to sell your fund? Remember 2 basic Principles.

01) If it is not impossible than It is next to impossible to go anything wrong with Equity Diversified Mutual Funds. Sectors or Thematic Funds can go on 2 extremes but this is not the case of Diversified Mutual Funds.

02) Unless and until the fund manager doesn’t leave the fund, It’s really not the time to exit the fund. Because a fund manager having a past record of good performance of several years will not become bad overnight.

Keep in mind the above 2 key fundamentals. Every time don’t think of selling your fund. And remember that even if the fund manager leaves the fund and the new fund manager change the Investment strategy than also nothing will happen over night. So Don’t be Panic.