Fear and Panic Returns – Weekly Market Watch

The last few weeks reflect a steadily declining market.  Investors become worried and usually bail at the worst time possible.  The news is confusing.  First we hear from the first quarter that GDP growth was 3.0%, consumer confidence is on the rise, labor markets are improving and the economy is improving.  Then we hear that the economies of Europe are falling apart, Greece has been bailed out and other countries debt has been down graded, there is conflict in the Middle East, North Korea and who knows where else, and BP cannot plug up their hole in the gulf.

This is all confusing.  This is causing the markets to be extremely volatile.  One day the market is up 2%, then the next three days are down.  Individual investors tend to make quick decisions and usually they are bad decisions, bailing out at exactly the lowest moment.  When one makes a decision to totally go into or out of the market, one is attempting to time the market which is very difficult to do.

What is the best thing to do?  If you are tempted to just bail, perhaps you should just go have a cup of coffee.  The best thing to do is usually to carefully evaluate where you are, evaluate your holdings, reassess your risk tolerance and think through any moves that you are about to make.  Markets fluctuations are normal, and even though when markets decline, we all lose money, these fluctuations also present opportunities.

Sometimes the best thing to do is relax and have a cup of coffee.  We remain confident that the overall economy is improving and that ultimately the markets will reflect this improvement as well.

For additional information contact Richard Taylor.

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