How Best To Invest During Troubled Times
Wednesday, March 19, 2008SUSIE GHARIB: A big question for investors these day, how can they best protect their investments and savings. Some may be tempted to bail out of stocks and others are wondering if they should just stash their cash under the mattress. But as Erika Miller reports, many of Wall Street's top strategists see some good investment opportunities now.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: There are plenty of reasons for investors to feel panicky these days. After all, the stock market is on shaky footing. The housing market continues to weaken and the economy is teetering on the brink of recession, perhaps in one already. The natural inclination of many investors may be to sell now, ask questions later. But financial planner Lew Altfest says most people should resist the temptation.
LEWIS ALTFEST, FINANCIAL PLANNER, L.J. ALTFEST & CO.: Essentially they should breathe in and breathe out and do nothing without a reason for doing it. And it isn't a good reason to say the market is down and can go down further.
MILLER: It may also be comforting to know that many investment strategists remain bullish on the stock market long term. They point out that the Fed is doing all it can to restore stability and confidence to financial markets. Investment strategist Jim Awad says now is a smart time for patient investors to buy large, well-run companies trading at deep discounts.
JAMES AWAD, CHAIRMAN, W.P. STEWART ASSET MANAGEMENT: If you are willing to look out over a year or two or three, as you should as an investor, if you dollar-cost average over the next couple of months into high-quality equities, you'll end up doing well.
MILLER: It may be tempting to move money into government bonds, which are backed by the Federal government and one of the safest investments. But Awad says that's probably a mistake, since many are yielding less than the rate of inflation.
AWAD: You are not getting the yields that you deserve long term. When the panic subsides, interest rates will get back to more normal levels and you'll be able to get better interest rates than you can today.
MILLER: Financial planners also say one of the most important things to do is take a close look at the holdings in your 401(k) or company retirement plan.
ALTFEST: If you have a good deal of your wealth in your company's stock, you ought to be cutting back on it now. I don't care at what price the stock is selling. You should be diversified.
MILLER: Experts say there is one situation where it is appropriate to sell now, if you are so anxious it's affecting your health. Then experts say, it's better to take the financial loss and sleep better at night. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
