AboutPaul Henneman Expertise Stock forecasting and fair market valuations.
Experience
Past/Present clients CBSMarketwatch.com, Hoovers.com, Multexinvestor.com, Bank of NY, numerous hedge funds and institutions, other partners and clients can be viewed at http://www.valuengine.com/about/careers.html
Question My grandfather left my mother some Key bank Stock in the 1960S. She passed away 8 years ago and I am the Trustee for her Estate. Last year it was worth about $160,000 and now is worth a fraction of that. I am concerned Key bank will fail and the stock will be worthless. Do you think I should sell now or hold on to the stock? Do you think Key Bank is big enough to be rescued by the bailout?
Thanks for your help.
Answer Michele,
Unfortunately this is a very difficult question to answer. The biggest concern I would address is how much of the overall net worth of the estate is represented by the Key Bank stock? There are two things to consider.
First, if the Key Bank stock represents a high percentage of the overall value of the estate, then there is huge risk here. If Key Bank does fall apart, then the estate would be dramatically affected. However, if this holding is a small percentage of the overall estate, and you feel there is a chance that Key Bank will recover, and its stock price rise, than you may want to wait it out.
The second issue is the opportunity cost of those funds. Investors should always look forward, what is the best way to invest their funds today to accomplish their goals tomorrow. Looking back is not a good way to do things, it ties an investor emotionally to the stock. The question is not if you think Key Bank will recover some of its losses. The question instead should purely be based on what you feel would be the best way to invest the funds remaining going forward.
Even if Key Bank is rescued by the bailout, it would not mean a full recovery in stock price. Only a short term bump.
I am sorry that I can not be of more help, but this is a very tough decision that you will need to make. Everyone will have a different answer, but these markets are so unpredictable that no one really can say with any certainty what will happen to Key Bank. This makes it a very risk investment, with possible upside if you stay in it, but terrible downside if things do not go well. The level of risk that you are willing to take with the remaining investment should dictate what you do next.
I hope this helps at least a little, please do not hesitate to follow up with me if I can be of any additional service.
Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com
