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Investment advisers: Don't overreact to stock market

Posted October 8, 2008

As the stock market continues to make climbs and take plunges, local financial advisers say they are hearing from more concerned clients seeking advice about their investments.

"In times like this, the concern level is high," said Raleigh investment adviser Gerald Townsend. "The first reaction is: 'I just want to get out of here. I want to stop the bleeding. I don't want to bleed anymore.'"

Understanding every situation is unique, Townsend warns many clients not to over react.

"Perhaps, they're in a more risky portfolio – they can shift to something not quite as risky without getting totally out of the market – keep the big toe in the water," he said.

Despite an emergency interest rate cut that sent the market indices rising Wednesday morning, they were down Wednesday afternoon. The Dow Jones Industrial Average, which plunged below 10,000 on Monday, was down nearly 190 points. The Nasdaq was down nearly 15 and the Standards & Poors 500 was down 11.

In fact, at a time when many investors want to pull out of the market, Townsend points out what he sees as the flip side to the dropping Dow.

"I don't know how much lower it's going, but I know it's dirt cheap, at present," he said.

He says for some people, if they start investing their money selectively and slowly, they could end up making good investments down the road.

But financial advisers warn the stock market, especially now, is not for everyone, and they recommend people seek advice from their own financial advisers before investing.

As the owner of U.S. Fitness in Raleigh, Tom Flanagan has already seen the value of his personal portfolio fall like a lead weight.

"First, I'm a business owner; second, I'm an individual investor, so at this point, they're both a little concerning," he said.

Although he says he is optimistic about the future and his investment portfolio, 'I just don't even open my statements, you know," he said. "At this point, it's just a paper loss."

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  • IceCreamMan Oct 8, 2008

    It's all about asset allocation and diversification. If you're properly allocated based on time horizon and personal tolerance to risk (volatility), you'll be fine.

  • TeresaBee Oct 8, 2008

    If I hear one more person use the expression "stop the bleeding" I will scream for ice cream.