My sister started in this fund in 1996 with around 4K and just added $100 a month. Yes, she kept it up through all of the downside in 2000-2003 and all the way through May 4th, 2007 on the next upside (adding $100 each month all the way).
She called me up and asked my opinion on whether she should sell or not. The account got up to around 28K and it's just a little fund for her daughter's college education expenses. I said, "Heck yeah! Get out! Do you want another ride down or get out at a great time where putting it in 6-month U.S. T-Bills will at least get you 12% more upside (after taxes) on the account before your daughter starts college?"
Nice story. My sister finally did the right thing. She didn't get too greedy. She just needed to be reminded that selling is a good thing when you get this close to all-time highs and the economy is not looking that good going forward.
Your niece is going to college in three years? If that is the case, then maybe it was a good idea to sell now, although I think that this fund will be much higher (possible $200/share) by the end of 2010. I've been a shareholder since March 1999 and was down quite a bit as of March 2003. I kept putting money in on a monthly basis and now have a sizable capital gain. It's part of my long-term portfolio that I have no intention of selling anytime soon.
She can get a guaranteed Florida prepaid 4 year university college fund for around $13K. If she decides not to go to Florida University, she will get her money back (I am not sure at what rate). I suggest you check it out. Other states also have guaranteed college funds. This could be a good option.
If, for example, your niece is 6 years old, a 4-year college education--and I'm not talking Harvard or Yale here--will cost her twice the amount her mother pocketed. I just researched this kind of thing for an educational trust I set up for my grandchildren. Your sis better put the money back to work or else hope her daughter wants to be a beautician.