Whenever we get a day like today — down more than 500 points on the Dow at one point — my phone begins ringing with inquiries from various media.
They always ask the same question: What should investors be doing NOW?
That is the wrong question. The proper one is: What should investors have done in the past to prepare for an event like TODAY?
Rather than repeat my usual spiel, I will simply point you towards some recent writings on that subject:
Anticipating (versus reacting to) the next black swan April 2 2011
Why the wild stock ride? August 6 2011
Smacked by big market swings, investors should alter their outlook August 19 2011
The investor’s dilemma: Earnings, valuation and what to do now September 10 2011
The bottom line remains that investing is a proactive — not reactive — endeavor. If you respond to every twitch, every news story, each turn of the wheel, you will become whipsawed.
That is no way to invest. And its no way to live life, stressing out over things that are out of your control.
What you can do is anticipate events that are cyclical in nature. These major shudders repeat every few years, so we should not be surprised by them. Construct a plan that allows you to ride out these events without panic or forced errors. You need a plan that anticipates these regular occurrences.
I strongly believe that many people are capable of doing this for themselves (No, you don’t have to pay anyone a fat fee for that). All it requires is a little intelligence, some home work, and a bit of planning
If you don’t have time to do this yourself, than read this.
