What a crazy week. Everyone who either works in, or is invested in the stock market can breathe a sigh of relief that at least this week is over. As someone in the former category, I can attest to the insanity of this week on a physical and emotional (let alone financial) basis. I began this article on Monday and have made daily edits to this first paragraph. But the list that follows has been the same for me all week long. Sitting here now on Friday afternoon with the Dow back up over 350 points today alone (phew) the weekend doesn’t seem as bleak as it did say, Tuesday. However, here are five things you can do to help you ride out the storm.

1. Remember that markets are cyclical.
What goes up, must come down. And what goes down will come up again. Think back a few years when everyone you know was preaching that investing in real estate was a no-risk situation because real estate never loses its value. That kind of thinking was wrong then, and the proof is in the drop in housing values today. Home values in California alone are down 35% from last year. Will they be down forever? Nope. It’s a cycle. Buyers or any investment need to be aware of that cycle and act accordingly. You don’t know when a massive turnaround will happen, and you want to be in the market when it does.

2. Don’t fall prey to panic selling.
As Scott Rothbort points out in “Five More Ways to Handle Market Stress”: “(H)ad you bought the [S&P 500] on the day before the 1987 market crash, your cumulative return through the end of July 2007 — without dividends — would be 415%. That is even after giving up 20% on the first day after your investment.”

3. Turn off the TV.
For every expert opinion there is an opposite opinion. If you have real fears, and not enough time to watch more than one network or get your news from more than one source, it may be better to change the channel, skip the business section and focus on something else for a while.

4. Continue long term investing.
Don’t stop investing in your company’s retirement plan – especially if your employer has a matching policy. This match is “free money” – whether the underlying investment is having a good or bad year. Keep your focus on the long term.

5. Know the FDIC.
Make sure your cash reserves are FDIC insured. The FDIC guarantees the safety of checking and savings deposits in member banks, currently up to $100,000 per depositor, per bank. If you have more than $100,000 in cash you may want to consider spreading the accounts to more than one bank, or talking to an advisor about other options.

Keep your wits about you, and let’s all hope for a less interesting week next week!

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This entry was posted on Friday, September 19th, 2008 at 6:02 pm and is filed under Current Events, Saving. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.