Newspaper article St Louis Post-Dispatch (MO)

Don't Run from the Bear; Hang in and Rebalance

Newspaper article St Louis Post-Dispatch (MO)

Don't Run from the Bear; Hang in and Rebalance

Article excerpt

So, how's your stomach? If the up-down-down, up-down-down Wall Street Waltz has you worried, you aren't alone. Never have so many had so much of their retirement funds tied up in a stock market they don't quite understand.

Mix in a dose of here-comes-the-bear pronouncements, a concerted effort by the Federal Reserve Board chairman to break the market's momentum, and a bull market in ever-conflicting financial advice, and it's no wonder everyone's feeling nervous and confused about what to do.

You can expect the market to be volatile for a while. Nobody knows whether this is a transition to a better market or a worse one, but a transition it is. With see-sawing the order of the day, you'll need to protect yourself a bit without jerking your portfolio around every time the market jerks. Get back in touch with your own investment philosophy and these investing basics and then don't worry, be happy. The best way to win with long term investments remains the same: Invest steadily in a mix of investments that balance each other. If you've left your portfolio on autopilot for a couple of years, you may have way more in the stock market, and especially those blue-chip winners, than you originally intended. Decide your best investment mix, such as 70 percent stocks, 20 percent bonds and 10 percent liquid savings, and stick with it. That means that you might have to move some money out of your winners every year over to your losers. Besides keeping you in balance, that forces you to buy low and sell high. Diversify among stocks, too. If all of your stock market money is in a Standard & Poor's 500 index fund, shift some into foreign stocks, small company stocks, mid-company stocks and bargain-priced so-called "value" stocks. Don't bail out altogether. This market hasn't even begun to test your long-term resolve, but it may. If it does, remember that the biggest investment losers are not those people who stay in through thick and thin. It's the people who pull out when times are bad and fail to get back in on time for the good times. A University of Michigan study proved this: Investors who were in the market for 1,276 trading days received 26. …

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