Main Street Finance

Movers and Shakers

By Jeff

There’s a whole lot of shaking going on, and yes, I had to resist very much to not put a great Elvis picture in this post, but that tagline was just too hard to resist.

As bad as the pun may be, the story is still true. The markets are all over the place, there was an earthquake that wasn’t anywhere near California, Irene is about to pummel a lot of the east coast, Steve Jobs may or may not come back as CEO of Apple and the rebels are making some serious waves in Libya.

So, the world is in turmoil and so is your portfolio. We all know that, the question now is, what do you do? As with many things, there are multiple options; I’ll discuss two.

Do nothing. This is as simple as it sounds. Literally do nothing. Repeat, nothing. Ride out the storm and let the markets recover—remember, it’s only a loss when you sell it for less than you bought it. If you can ride this out for a little while and let your investments regain what they lost, you will be no worse for the wear. It takes a little patience, but will be worth it in the long-run.

Do something. We keep it simple here on Main St. Do nothing, or do something, the choice is yours! While doing nothing is a great option, I like this one a little better. Consider the following analogy; you go to the store at the first of the month to purchase your monthly supply of Twix bars and chocolate milk, the same way you do every month. Why? Because they’re freaking delicious! And besides you’ve been purchasing them this way for the last 5 years and even though over time the price increased, you still need them. However, this month you notice that the price has decreased 25%. So, do you take your money and invest in purchasing some York patties? No, you stock up on Twix and think about your big score on the way home.

While it may be oversimplifying a little you can do the same thing with your portfolio. You can often buy the same stocks/funds after a dip in the market as you could before, getting the same quality of stock, but at a lower price. So, in short, if you want to take the do something approach, take out your wallet and score some good deals.

There you have it folks; after a market dip you can either do something or do nothing. You choose.

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