(MONEY Magazine) – It's a natural response. You see that your fund has lost money lately -- as 92% of them did during the first half of 1994 -- and you decide to cash out. Well, don't act until you read this. "There isn't a worse time than now to sell your fund shares," says Sheldon Jacobs, editor of No-Load Fund Investor ($99; 800-252-2044). "You should always try to buy low -- like now -- and sell high." Of course, that bit of wisdom doesn't mean you should hang on to poor performers forever. Here are five valid reasons for bailing out: The fund has consistently underperformed its peers. If your fund has ranked among the bottom fifth of all funds of its type for two years or more, consider switching to one that has regularly beaten its category average. A new manager is faltering. You want to give a new skipper time. But shop for a new fund if the portfolio's performance has slipped badly vs. its competitor's after two years. You think your fund is going out of style. Right now, for example, many analysts believe that large cyclical stocks -- firms like Chrysler, whose profits may get squeezed as the economy slows down -- seem set for a breather after two years that saw some of them more than double in value. If you own a fund that has substantial holdings of such shares, like $1.1 billion New England Growth or $86 million Olympic Equity Income, consider paring back in favor of funds like those described on page 44 that invest in medium-size companies. The fund has changed strategy. For example, if you are trying to maintain a precise asset mix in your overall portfolio and your aggressive growth fund starts to keep a big chunk of its money in cash, you may want to move to a fund that stays fully invested. To learn whether your fund has changed its stripes, periodically check its holdings (and cash levels) by calling a fund representative. You want to create a tax loss. Don't let tax considerations alone drive your investment decisions. However, Ken Gregory, editor of No-Load Fund Analyst ($195 a year; 800-776-9555), notes that you may be able to sell a dog without unbalancing your portfolio to lessen any 1994 capital-gains tax liability. Simply dump your losing shares and shift the proceeds to a more ; promising fund, perhaps with a similar investment strategy. Come April 15, your tax loss will save you money.