Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Advice for Investors in This Crazy Market

The VIX Volatility Index surged to an all-time high today -- and if you've been reading the newspapers this week, that's likely the most obvious stat you've heard in some time. Things are rocky out there, though. Even blue-chip bellwethers General Electric (NYSE: GE  ) , AT&T (NYSE: T  ) , Verizon (NYSE: VZ  ) , Cisco (Nasdaq: CSCO  ) , and Schlumberger (NYSE: SLB  ) are down 25% or more in the past month.

There's been nowhere to hide. So what's your next move? We asked a panel of Fool analysts what advice they'd give investors in a market with stock prices continually dropping daily. Here's what they had to say.

Robert Brokamp: Keep saving for retirement. You don't want to pass up the tax breaks that come with IRAs and 401(k)s, nor do you want to pass up the employer match, if you're lucky enough to have such a thing. If you can't stand buying more stocks with each contribution (though that's what I'm doing with each of my contributions), choose something more conservative, such as the money market fund or a shorter-term bond fund. But whatever you do, keep saving.

This is also a time to build up your emergency fund. The unemployment rate is up and will keep rising. Everyone should have three to six months' worth of living expenses somewhere safe, such as an FDIC-insured savings account.

Bill Barker: Don't try to time anything. Invest your time into finding highly stable companies with histories of surviving or even thriving in recessionary conditions. Make sure they've got rock-solid balance sheets, and find a price that feels "once in a lifetime" to you. You may already be seeing those prices today, but you don't need to feel like the market must bottom before buying something that is clearly trading below its intrinsic value.

If you're queasy about anything, don't buy more -- but don't sell into a panic unless you're not already diversified appropriately for when you're going to need to take that money out of the market. If that's the case, rebalance your portfolio now.

Tim Hanson: Dollar-cost average in on a regular basis, but do so in small amounts in order to have money on the sidelines in case the market drops more. Given low trading costs, that's the best way to take advantage. If you're paying $4 per trade (not uncommon), you can invest in blocks as small as $200 without getting mugged by trading costs.

JE: Don't check your stocks.

Andy Cross: It's amazing, and unsettling, to see the stocks of some very high quality companies fall day after day. If you've built a fairly bulletproof and diversified portfolio, then you can take these hits in stride, as long as you're investing cash you don't need until five or 10 years from now, or longer. You may even want to nibble at them at attractive prices (I use DRiP programs for many of my holdings). Certainly don't rashly sell all your stocks; that's just what we're seeing from hedge funds and mutual funds. Rather, keep your wits about you, and look at picking up shares of your favorite investments at a discount. I can pretty much guarantee you'll find some good ones out there.

For continuing coverage and analysis on all the market turmoil:

None of the advisors own shares of the companies mentioned in this story. Read about the Fool's disclosure policy here.

Read/Post Comments (3) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 10, 2008, at 5:26 PM, pmcalmes wrote:

    JE has the best answer... If you're and investor, you just dance with who brung ya! History has never failed us.

  • Report this Comment On October 11, 2008, at 3:45 AM, Brettze wrote:

    If you just bought a new car and it is not GM or Ford, then you are just crazy!

  • Report this Comment On October 16, 2008, at 2:46 PM, catoismymotor wrote:

    I like Tim Hanson's advice. Slow and steady will win this race.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 750683, ~/Articles/ArticleHandler.aspx, 10/25/2016 1:44:56 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,183.92 -39.11 -0.21%
S&P 500 2,144.83 -6.50 -0.30%
NASD 5,285.97 -23.86 -0.45%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 1:29 PM
CSCO $30.34 Down -0.12 -0.39%
Cisco Systems CAPS Rating: ****
GE $28.79 Down -0.14 -0.47%
General Electric CAPS Rating: ****
SLB $80.38 Up +0.07 +0.08%
Schlumberger CAPS Rating: ****
T $36.74 Down -0.12 -0.32%
AT and T CAPS Rating: ****
VZ $47.98 Down -0.23 -0.48%
Verizon Communicat… CAPS Rating: ****