How to cope with what’s going on in today’s market.

The market seems to have spiraled out of control these days. One day, recession fears cause the market to fall; the next day it’s inflation; banks and other financial institutions are posting massive losses; the Federal Reserve has had to find a way to bail out Bear Stearns, while at the same time home prices continue to fall, and foreclosures hit an all time high.

The Fed has been cutting interest rates to battle recession, at the same time oil continues to hit a new high causing gas prices to soar. On top of that, we are experiencing stagflation which has not happened since the 1970’s. So what are we supposed to do in times like this?

First of all, don’t panic! It’s natural to want to sell everything and walk away in times like this - some people have. This is causes a greater chance, of losing on your investments. If you take this route and you do decide to invest again, the market may go up to new highs and you miss out on all of the profits that could have been gained. Before you make any decisions, make sure you weigh out all of the pros and cons.

Next, don’t be afraid to open your account statement. There is a saying, “What you don’t know can’t hurt you”. This is the one time you do need to know at all times what is going on. This way you can make an informed decision on what to keep and what to change in your account. If you don’t pay attention with what’s going on with your investments, you could possibly suffer major losses.

Now that you know what is going on in your account, the next step is to ask yourself how much risk you are willing to take. Be sure to be honest with yourself, and to your advisor. Invest in a way that makes you feel comfortable. Just remember that a high risk does not necessarily mean a high reward or a better gain.

In the next coming months I believe the market will continue to have some wild swings. With the presidential elections around the corner, interest rates dropping, and home prices slipping, this may cause some uncertainty in the market. If you have any questions about your account, or what’s going on in the market, make sure you contact your advisor with any questions.