Investors Concerned About Reversal of Fortunes

Stocks don't rise forever, although they did rise for five straight weeks before dropping last week.  The decline was unnerving, but not horrible.  The major stock indexes shrunk a bit over 2% for the week.  But the causes of the malaise could have troubling implications.  Cisco Systems warned that future profits for the technology darling might be lower than anticipated.  On top of that, there were concerns about a slowdown in foreign economies including China that could spill over to the U.S. economy.  In short, it was a week that brought to the fore a number of problems that had been lurking in the background during what was otherwise a pleasant summer and early fall stock market rally.  But before concluding that the good times are over, something that many pundits suggest any time stocks drop, wait for a week or two to see if the downward trend continues. Even if it does, though, will it be wise to bail? 

           Take a longer-term view.  We are all too familiar with the havoc recessions can wreak on our money. Stock and real estate prices are a lot lower than they were a few years ago. Interest rates are at record lows, which may be great for homeowners, but stinks for investors, particularly retirees.  Stock prices have rebounded, but after last week's losses, angst-ridden investors are ready to dump stocks.  That's a recipe for mediocre investment performance. Rather than worrying about where your investments will be in ten minutes, or ten days, or even ten months from now, focus on how they are likely to fare ten and 20 years from now. What possible good can come from obsessing over what happened to your stocks last week or what will happen to them next week?  Take a long-term view instead, because most of the money you have probably won't be needed for a long time. Your health and your wealth will both benefit.