Quantitative Tool Helps Managers Sell

The 19th Century London financier Nathan Rothschild is credited with having said, "The time to buy is when blood is running in the streets."

As this maxim suggests, market turmoil can present equity managers with extraordinary buying opportunities. Capitalizing on such buying opportunities, however, generally requires managers to create liquidity within their portfolios-and that means knowing what to sell. Selling is prone to behavioral influences. Research suggests that behaviorally motivated sell decisions increase when experiencing under-performance or riding out a turbulent market. There are ideas to help check behavioral tendencies during these kinds of turbulent times.