First, focus on things you can control. For example, you can control your emotions so that you aren’t panicked into making unwise, short-term decisions. Panic is not an effective investment strategy.
Next, review and rebalance your portfolio. During this market decline, some of your holdings have probably fallen more than others. This may mean that you now own a lower percentage of some assets than you had originally intended. Consequently, you may need to make some adjustments. Also, look for quality investments. In a difficult economic environment, you’ll want to own stocks of companies with strong balance sheets.
Finally, be patient. History has shown that turnarounds can happen quickly and unexpectedly. The most successful investors stay the course and take advantage of opportunities while others are “bailing out” of the financial markets.
Watch For Positive Changes In Investment Climate
As you know, the stock market is still volatile. But if you look beyond the numbers, you might see some positive developments for investors.
First, the U.S. Treasury has taken major steps to stabilize the financial system, while the Federal Reserve has acted aggressively to free up the flow of credit to consumers and businesses. Furthermore, President Obama and the new Congress are enacting a stimulus package that could have a large, positive and immediate impact on the economy.
Also, a majority of the economists polled in the well-respected Blue Chip Economic Indicators poll said they expected the recession to end in the second half of 2009. Of course, even the official end of the recession wouldn’t necessarily indicate a robust economy, but it would almost certainly improve the investment environment.
And right now, you can find quality investments that are attractively priced.
Contact Wendell at Edward Jones www.edwardjones.com. |
