I know what you are thinking.....
"Should I sell now?"
If you are in the market for just price then I'm hurting for you right now. I honestly don't have an answer. You did just watch a big part of those 2013 gains disappear. In fact you are now back to October 18, 2013, like these last 4.5 months never happened.
If I was an MPT guy I would tell you not to worry that the long term average of the markets is something great like 10% CAGR and just hang in there we are efficient as hell, and you'll be fine.
I'm happy to tell all of you who are investing for dividend growth (in quality stocks, and not just one or two of them) that things are great. Nothing has changed but the price. I want to further encourage you by taking a look at a return.
I like to keep things simple. From Investopedia:
I would add to this that the capital gains portion of a return is only meaningful when the investment is sold or closed out. A capital gain return does gain some mathematical relevance with large moves and can be further solidified, without selling, by adding some smart option contracts or stop loss orders. However, until the dust settles and you have cash in your hand you do not have a return.
If you want more return..... well you have to buy another investment and another set of risks. All understand this.
These kinds of returns are the returns that cause sell-side anxiety.
Do you sell?
When capital gains are the major goal or major component of your return then at some point you have to sell to get any return.
Days like today and the resulting emotions are what cause sell side anxiety and often under performance. Risk against the price component of return is often forgotten about when the markets are moving up and up. Then we have a hard sell off, and we are all reminded that the sweet song of MPT and capital gains are best regarded over long time frames.
When approaching the market I plan on dividends to be the most measurable and useful return. Dividends are new capital. You own a company that proceeded to get some business done and return you some of the profits. Your return is very real in this case, depending on what you do with it can have other results but because it is a cash payment it's a realized return.
My returns are doing just fine right now. If you are savvy Dividend Growth Investor then your returns are doing just fine right now as well.
I'm not a fan of falling prices, but if you are in the market then falling prices should be a part of the plan that you can withstand. The other part should be a growing return of new capital via a dividend.