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Archive for July, 2011

Up We Go, Down We Go

July 28th, 2011 at 07:21 am

(Evansville Business Magazine, August, 2011)

If you like roller coasters, you’ll love these two stomach-churners: the Dow Jones Beast and the S&P 500 Raven. The economic quarter that ended June 30 included a quick 4% ride upward into early May, followed by a 7% drop into June. Then came the big finish: a 5% rebound in just five days to begin the current quarter. Halfway through the 3-month white-knuckler, a Goldman Sachs report described the markets as “puzzling.” If Goldman Sachs is scratching its collective head, what are the rest of us investors supposed to do?

“If you watch the markets daily, it’ll make you crazy,” says Myra Teal, a financial advisor for Edward Jones in Newburgh, Ind. “It all starts with having a plan, and then we stress three things: buy high quality products, diversify, and hold for the long term.”

Certified Financial Planner™ Chad Sander, 46, began his career as an investment advisor in the 1990s when double-digit stock market returns were the norm. Now director of investments and vice president at Payne Wealth Partners in Evansville, Sander knows the ride has become bumpy.

“My first five years in the business, it all seemed pretty easy,” he smiles. “Those 15 and 20% returns were nice, but we are in a lower return environment now and probably will be for quite awhile because of several factors, primarily debt here and in Europe.”

Both Teal and Sander agree that investors of all ages should establish goals, understand how much and how fast their money must grow to reach those goals, and prepare for the V word.

“Dealing with volatility is a big part of investing,” Sander says. “Having the discipline to stick with your investment strategy in uncertain times is difficult, but it’s critical to reaching your goals.”

Adds Teal, “I have clients 70 or older who have seen the ups and downs for years, and they’re often the ones who come in when the markets look terrible and say, ‘You know, I think it’s time to buy.’ If you ignore most of what the media says, and know the world’s not going to implode, you’ll do well in the long run.”

In the meantime, hang on tight and enjoy the ride.