To sell or to hold? Or even to buy? Thousands of new shareholders across the State have been shaken by the fall in the value of their Eircom shareholding and are wondering whether to cut their losses or to hold on.

Those wishing to make a quick killing should, of course, have sold by now. But that is a bit like the advice to the man looking for directions: "If I were you I wouldn't start from here."

It appears that at most 12 per cent of the 574,000 of the people who bought shares have sold, leaving some 500,000 still holding. Some of these had intended to make a quick buck but held on too long. Some, who may need the money to repay loans or for other purposes, may now choose to cut their losses and sell.

But for most people, who bought the shares as a medium-to-long-term investment - and even for many of the disappointed shareholders who hoped to make a quick buck - the best advice now is to hold on. History suggests - strongly - that shares are normally a good long-term investment.

Eircom is the same company for which investors were willing to pay €5 a share just a couple of months ago and even if more bumps lie ahead the long-term prospects for the group should be good. Investors also get a 4 per cent loyalty bonus in additional shares after year one, better than the return in a bank account.

It is unfortunate for the bulk of the shareholders, in hindsight, that the shares were launched at a time when the international telecoms sector was "frothy" and "Ireland Inc" was a sexy story.

This led to the share being priced aggressively - and more expensively that its European peers - though fortunately not as aggressively as advised by Merrill Lynch, one of the investment banks advising the Government.

Now the telecoms sector is out of favour and many in London are questioning the "Ireland Inc" story and putting forward a trite "boom to bust" theory.

The next marker for investors is Eircom's interim results to be published in mid-November. After that, like any company investment, shareholders are hoping that the management can do a good job.

In Eircom's case this means benefiting from the growth in mobile and data communications. Crucially, Eircom must also diversify, with the UK the initial target, possibly in tandem with its Dutch telecoms shareholder KPN. With strong results and a diversification story in prospect, shareholders should hold on.