Last week I scheduled
three entries to post today when lo and behold the so-called bottom fell out of
the stock markets and the disaster continues today. I thought it would be
helpful if we took a few moments to describe why it happened and then offer
some clear cut realistic ways to combat this disaster.
If there is one thing that’s
certain with the stock market is that it does not like uncertainty. Most everyone was blind-sided by the markets
severe and sharp decline. So the question is why? First this is one more reminder that the global
economy is on weak footing. In addition,
the banking and economic system of the United States and over the globe is
changing rapidly and it’s hard to decide which direction it will take. Did you know, for example, that some
countries interest rates are below zero?
So what can you do for
yourself?
To begin, don’t let your
emotions take over. Stay calm and realize
that these things do happen. I’ve been
in this business for 32 years and I can remember when the market lost 25% in one day.
There have been other sharp declines such as the accounting and
market scandals of 2001 and 2002 and need we not forget the sub-prime housing
crisis of 2008-09?
Here is a key take away to
help you. I can point to five key good
sound areas that have shown positive growth even after last Friday’s massive
sell-off. For your financial plan here
they are. Utilities (up over 15% ytd),
Consumer Staples , NY tax-free Municipal bonds, Real Estate and long term High-grade corporate
bonds. And there are more. They point is to use this lesson as a way of
helping you to diversify your portfolio now.
To be continued.