As a result of the recent run-up in the market, many of my holdings have, by the strictest of definitions, become overvalued. This prompts the general question: What do I do now? Moreover, additional questions pop up such as: If I do sell, should I sell a part of my position, or all of it? When should I pull the trigger, or put another way, how much overvaluation (risk) should I accept before I sell? Since the market is overheated, should I go to cash or look for alternative investments at better valuations to invest in?
Answering these and other important questions correctly could have a major impact on my financial future. Therefore, prudence dictates that I must take great care to think things through to their logical conclusions. However, experience has taught me that there is no general, or one-size-fits-all, answer to any of these important questions. The only way to truly get these questions right is to analyze each specific company (stock) that I own one at a time, basing my decision on the individual merits of each.
Source: Guru Focus
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