IBM

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I cannot comment on what you should do without knowing your entire financial situation but ultimately if this is a large part of your portfolio you would be best off being more diversified as there could be more downside.

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I will add just a bit to this to help make a decision.

I too own some IBM, it was one of my first stocks, and I plan to pass it down as well - I don't anticipate ever selling, so I echo misterc that it is a great company.

I also think that ultimately, you will need to sell some eventually if it is a large % of your assets (I will tell you first hand, having one stock dictate all the ups and downs of your portfolio can be gut-wrenching at times). If that is the case, consider it a great stock to help build a well rounded portfolio.

So far, I just agree with the above poster; now comes the question of when to sell.

Since you inherited the stock, I am assuming you got a stepped-up basis in its value, meaning that your gain or loss upon selling will be based on the price when you inherited it (this is good news, because if your basis was your bequeather's, you would likely be sitting on a huge gain). So again, when should you sell?

If you could stand to take some capital loss, in the current year, you may want to sell it now while it is down. If that is not an issue, I would say maybe wait for the price to stabilize a bit (at least in the $160-175 range) to grab some more value out of it. Or, maybe you might get a big pay bump next year, cap gains tax rates go up at a certain level, so you might want to avoid paying that extra 5-8.8% if you can help it. The point is keep taxes in mind, which is unique to you.

The other consideration is market timing; if this is your first stock (or again, a large chunk of your assets), even though you would be selling now at an undervalued point, it would be a good time to put some money elsewhere, as the market is offering more bargains now than it has in a couple years. IBM will likely move with the market, as it is a DOW stock, so as it moves up, so will the market.

Nobody can tell you exactly what to do because everyone's situation is different. Having said that, I might suggest selling a bit in staggered chunks. That is, maybe sell a bit now with the purpose of reinvesting in other stocks (or Indexes would be my suggestion, even a good old S&P 500 ETF like VOO). From there, repeat this over time at more attractive prices. I personally just wouldn't want it to be any more than 20% of my portfolio, but in reality you would like it to be less than that (no more than 5%). There is just a psychological pull that a stock that is given/passed down to you to hold onto more than would be advisable, at least for me that is.

So to summarize: Watch out for taxes, know your situation for this year and next. Diversify by selling some when timing makes sense. When you sell, reinvest it, don't spend it. I would suggest depositing the certificate in a brokerage account and working from there.