Tuesday, September 16, 2008

Memo to the Uneasy Investor: Be Strong

This article was written by RON LIEBER (NEW YORK TIMES, NYTIMES.COM)

It’s pretty hard to stick with a long-term plan for your money when the financial world seems to be unraveling around you.

You were probably already uneasy about home prices, job stability and inflation. Then the government took over Fannie Mae and Freddie Mac, Lehman Brothers scrambled for a buyer and the stock of Washington Mutual fell below $3 amid concerns about its own shaky standing — and that’s just in the last week.

The temptation is to climb under the covers, money safely in the mattress, and hide from a world that has surely changed forever.

“The big question that people ask during these things: ‘Is it different this time?’ ” says J. Mark Joseph, of Sentinel Wealth Management in Reston, Va.

And is it? Well, no, not really. And as with any market disruption, you need to start by staring down the volatility and putting it in context. Then, face up to whatever fears led you to stop investing money or to move everything into safer vehicles — or to seriously ponder those alternatives.

Finally, resolve to be brave (and well diversified).