Dow Hits New Lows: What Should Investors Do Now?
Posted Mar 05, 2009 01:37pm EST
by Tech Ticker in Investing, Recession
As if the past 15 months haven't been scary enough, the Dow was plunging to new lows Thursday afternoon.
So what should already devastated investors do now?
Liz Ann Sonders, chief investment strategist for Charles Schwab, says now is not the time to hoard all your money in cash and abandon stocks altogether, as tempting as it may be. Clearly that's not a viable long-term investment strategy.
Instead, Sonders advises:
Get a plan, it's never too late to start one or get your "old" one back on track.
If you're going to panic, do so "intelligently" by making incremental portfolio changes to reflect your tolerance for risk and time horizon.
Don't try to bottom pick the market.
Don't forget about savings when the bull market reappears. Such advice may seem self-evident but it's worth repeating (and hearing) again in what remains a very scary market that has paralyzed many investors.
http://finance.yahoo.com/tech-ticker/article/201317/Dow-Hits-New-Lows-What-Should-Investors-Do-Now?tickers=%5Edji,%5Egspc%20,SPY,DIA,XLF,QQQQ
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Transcript of video:
There's no "one size fits all" in financial planning.
Be honest about time horizon, risk tolerance.
Investors recovering from market devastation.
Thawing of investor paralysis
Large cash positions not a long term strategy.
Panic intelligently. Panic slowly.
Thoughtfully analysizng investment adjustment.
How do you panic intelligenty:
Thoughfully analysing investment adjustment
One option: Make adjustments to new allocations,
Transition into a new investment strategy
Bottom calling isn't a smart strategy
Select investment strategies for the long haul
What should investors do now?
Long term expected returns for asset classes.
Better returns may come based on past, lower returns.
Don't abandon equities altogether.
Thawing of investor paralysis
Investors recovering from market devastation
Investors fled to cash in December.
Then drew down cash for fixed income in January
Investors slowly embracing more risk
February data showed movement into defensive stocks
Get an investment plan
It's never too late
And don't forget savings
Januray US Savings rate surged 5%, levels last seen in 93
And don't forget savings - even in a bull market.
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
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