Market Fears? Stay The Course!

Published in
Columbus Dispatch (10.5.08)
Market Fears? Stay The Course!
By Clint Edgington, CFA

Is your trigger finger anxiously hovering over the SELL button? These are truly the times that try a man’s soul.

But…these are exactly the times to rely on a solid financial plan. As long as your plan is prudent, there is no reason to deviate. In fact, it may well be imprudent to deviate at this point.

Every bubble and every trough in the market has a very true and believable story. Remember the exciting days of the late 1990’s? While it’s easy to remember the aftermath, markets were enamored by the promise of the internet and the mind-boggling technological changes. Alan Greenspan commented on January 13, 2000 that in hindsight,

“We may conceivably conclude…that…the American economy was experiencing a once-in-a-century acceleration of innovation, which propelled forward productivity… and stock prices at a pace not seen in generations”

Even on the eve of an extended and painful market decline, the leader of our Federal Reserve knew the truth of what our economy was experiencing, but could not predict the outcome of the markets. Once the market sentiment shifted in 2000, a long, grueling bear market set in through 2002. During the times of Enron and terrorism, it appeared that there was no silver lining. Yet our economy is resilient and our markets are reasonably liquid. The markets have rebounded significantly since then.

So then, what to do?

1. your plan. Your personal situation should impact your plan, not the short term vagaries of the market.
2. No plan? Get to your Investment Advisor ASAP. Conversely, if you feel comfortable doing this yourself, create a plan (in writing) that will steer your course.
3. If your plan is intact, Stay the Course!