My colleagues told me not to do it, but I went and did it anyway.

It was mid-October when I worked up the nerve to peek into my portfolio and check the damage. My colleagues could only say "I told you so" when, after facing a sea of red, I let out an audible gasp and closed the Web page, trying to forget what I'd just seen.

It's ugly out there; we all know that. It's especially ugly for the many people who were hoping that this would be the year they'd begin their golden years of retirement, only to watch their savings dissolve.

To them, I say: I'm with you
Several family members and friends of mine were hoping their carefully planned retirement coffers would stretch much further than they are at this uncertain time. Now that they've lost a hefty percentage of their returns, they're finding themselves faced with pressures and stressors that they couldn't have dreamed about a year or so ago.

It's a small consolation to hear phrases like "prime buying opportunity" and "lock in now for long-term gains." You're already nearing, or even in, retirement, and much of your savings has already gone down the drain. You're not looking for prime buying opportunities; you just want to preserve what's left. What do you do now?

It's easy to panic. Don't.
Fool retirement expert Robert Brokamp sat down with Larry Swedroe, director of research for Buckingham Asset Management, in the November issue of Rule Your Retirement to talk about what investors can do now to pick up the pieces of their portfolio. Swedroe's advice? "Even smart people make mistakes; only fools keep repeating them. So if you didn't have a well-thought-out plan in the first place -- that made sure you did not take more risk than you have the ability, willingness, or need to take -- then you should sit down immediately and write that plan."

But what does that mean in action-oriented terms? In a nutshell, Swedroe says, if you sell everything now and try to convert what's left to cash, you're making those losses permanent. What you should do instead, even though the short-term pain may be intense, is stay on course with your plan -- or if you have no plan, sit down today to develop one. Now is no time for panic:

The only way you get the returns that stocks have provided over the long term is you must be there for the entire time. You have to be like a deer hunter. You can't just leave your house at 6:02, shoot a deer at 6:09, and go home. You have to be there for hours waiting patiently for the deer to show up, and that is the key for investors. Patience is a necessary ingredient.

And now, an illustration
Sure, the losses of the past three months have hurt. But let's back up for a moment. If you'd invested in these companies before Black Monday 1987 and held through this fall, you would have done quite well:


Oct. 1, 1987 Price

Sept. 2, 2008 Price


Pfizer (NYSE:PFE)




Johnson & Johnson (NYSE:JNJ)




General Electric (NYSE:GE)




Microsoft (NASDAQ:MSFT)




Wal-Mart (NYSE:WMT)




Bank of America (NYSE:BAC)








Data from Yahoo! Finance. Prices adjusted for splits and dividends.

It's true that history doesn't predict future performance. But severe losses in the market have hit us before -- the above sampling encapsulates not only Black Monday but the S&L crisis, Persian Gulf War, Nasdaq/dot-com bubble, and 9/11 -- and the market has been resilient. (Indeed, while I cherry-picked the stocks in the table, the S&P 500 gained more than 500% over that time frame. Not too shabby.)

I'd be willing to put what's left of my red-stained portfolio on one prediction: They'll rise again.

Not tomorrow, or even next year. But hang tough. Sit tight. And remember three keys:

  1. Get a savings/retirement plan (or stick to an existing plan).
  2. Practice patience and perspective.
  3. Don't abandon equities.

It's tough to see, but there's light at the end of this tunnel. The pain we're feeling now won't last forever. As Larry Swedroe says, patience and perspective are necessities.

Of course, the first thing you need is a solid plan -- something you may be lacking. If that's the case, or if you need retirement tips, calculators, and specific stock and fund ideas -- then I encourage you to check out our Rule Your Retirement service right now. You can sample the entire service with a free 30-day trial by clicking here.

Hope Nelson-Pope is online coordinating editor at The Motley Fool. She owns shares of Microsoft and Apple. The Motley Fool owns shares of Pfizer. Microsoft, Wal-Mart, and Pfizer are Motley Fool Inside Value recommendations. Pfizer, Bank of America, and Johnson & Johnson are Income Investor selections. Apple is a Stock Advisor pick. The Fool's disclosure policy can't bear to peek in on its portfolio.