How will this affect my investments?
With all the news on short-term market changes and the price of oil, staying on your long-term investment strategy can be difficult. Lawmakers agreed on a $700 billion plan, called The Emergency Economic Stabilization Act of 2008, to relieve the credit markets and restore the flow of credit to the U.S. economy.
The bailout may calm the financial markets - and calmer financial markets are more conducive to long-term investing. As a long-term investor, it is important to remember that you should follow your principals rather than chase predictions. Just because the market reacts, doesn't mean you should.
How to respond?
Stick with the basics: have a plan, buy and hold quality, diversify and maintain a long-term perspective. Don't sell good companies just because prices fall. Not even the world's greatest companies are immune from price declines, but many have recovered and moved on to new highs.
There are three reasons to sell: when you own a company that is poorly run; when you own a good company in a weak market; and when you own too much of one company or industry.
When to buy
If you have room in your portfolio to add an appropriate investment, look now at quality investments but don't buy investments today that you would not want to own in a recession tomorrow.
If you are uncertain about your finances, schedule an appointment with a financial advisor and review your portfolio. That way, you can help make sure you are in control of where you want to go and how you'll potentially get there.
If you've created a long-term strategy, one that is suitable for your needs, goals, risk tolerance and time horizon, stick with it.
Don't get rattled by Wall Street's bumpy road
The last few months have been difficult ones for investors, and we may still have some shaky times ahead. But by showing patience, diversifying your holdings and buying quality investments, you can build a strong investment foundation, one that can potentially withstand all sorts of market shocks.
Bad times don't last but smart investors do.
Betty Teille is a financial advisor for Edward Jones, 1334 E. Chandler Blvd., in Ahwatukee Foothills. She can be reached at (480) 283-0874 or at www.edwardjones.com.