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Local financial advisers believe all is not lost
By Michelle Koetters
mkoetters@pantagraph.com
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BLOOMINGTON -- The call to abandon ship sounded on Wall Street in a tough-to-stomach week that saw the one-year anniversary of an all-time high marked with a deep crash. “People are panicking. They’re concerned,” said David Stokes, a financial adviser with Edward Jones in downtown Bloomington.

That concern is not unfounded, but Stokes recommends a portfolio review. Make sure your assets are allocated correctly, check that you have good investments and revisit your financial goals, he said.

Now could be the time to buy shares at a low price, but you may have to make the tough decision to sell some — but not all — of your stocks, Stokes said.

A year and a day after the Dow Jones industrials hit a record of 14,164.53, the market closed out its worst week ever. Friday was another day of up-and-down trading, with stocks down about 700 points at one point before a rebound that ended the day at a loss of 128 points.

Stocks have fallen 2,399 points in the past eight days to settle at 8,451.49.

The resulting dips in investors’ accounts are not easy to go through, said Thomas Green, a certified financial planner and owner of Green Financial Group in Streator. Nonetheless, the stock market is the best place to stash your money, he said.

“You have to look at the big picture,” Green said.

Eric Raufer, financial adviser for Edward Jones in Bloomington, is busy calming investors’ nerves.

“They’re chewing their fingernails down, and their knees are shaking,” Raufer said. “History has shown us when you get these kinds of dips, it’s not the time to sell. It’s the time to buy.”

A low stock market presents great buying opportunities, but it also presents challenges.

Someone who has retired or is close to retirement should already have moved money from stocks to safer investments like money market savings accounts or certificates of deposits, Green said. People who haven’t planned that way might consider working an extra six months or a year, he said.

As alternatives to withdrawing funds, trim your expenses as much as possible, or explore the opportunity for a home-equity loan, he said.

The worst thing retirees can do is sell all their stocks, but it’s OK to move a year or two’s worth of income to safer accounts, Stokes said.

Young people may want to sit on the sidelines and watch while the market tumbles, planning their grand entrances when the stock market is posed to recover. But financial planners know it’s hard to time the market that well.

“If they have excess money, it’s a great time to be a beginning investor. You have a huge opportunity in front of you,” Green said. “While it may be a shaky ride in the short-term, in the long-term it’ll pay huge dividends.”

Anyone can jump into the stock market now, regardless of age, as long as he wants to invest for at least four years, Raufer said. If you’re not in the market, slowly put money in over the course of three to six months instead of investing the whole sum in one day, Raufer said.

Think of an amount you’re willing to invest, then buy into the market with about half of that money, Stokes said.

If the stock market continues to decline, the good news is you have another buying opportunity with the rest of your money, he said. If the stock market does move forward immediately, you’ll be glad to have bought some shares, he said.

Even 80-year-olds recognize the buying opportunities these days, Stokes said.

“This economy, this stock market, has hit like a freight train,” Stokes said. “When things go down hard and fast, they’re going to come up very rapidly, as well.”

Take a look
David Stokes, a financial advisor for Edward Jones, examined the growth of $10,000 in the Investment Company of America during various bear markets, Friday, October 11, 2008. Stokes said there were a number of interesting correlations between political and monetary cycles and trends in the market. (The Pantagraph, David Proeber)
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Reader comments on this story - 2 total

Note: All views and opinions expressed in reader comments are solely those of the individual submitting the comment, and not those of the Pantagraph or its staff.

zero wrote on Oct 11, 2008 9:47 AM:

" It is simple. Cut expenses, invest conservatively, and take a long term perspective. Then, go buy a diamond crystal speed boat and paint it gold. "

jipsi wrote on Oct 11, 2008 9:44 AM:

" The government needs to just FREEZE EVERYTHING on the stock market scene, and indefinitely.
NO ONE should be 'jumping ship', because THAT ACTION is the VERY REASON the stock market (and the United States!) is in trouble!

It's panic at the supermarket: somebody mentions 'blizzard' and suddenly everyone, even those already well-stocked with basics at home, clear the shelves of everything from apple sauce to zip-lock baggies.
In a few hours, there is NO MILK, WATER, BATTERIES or BREAD to be found in a 50 miles radius...
And NO STORM in sight.

The ANSWER is NOT for powers-that-be to hand the stores loads of money to truck in EVEN MORE stuff to handle the alarming demand; it's to INFORM PEOPLE to stop panicking over rumors AND to force the stores to NOT RAISE PRICES, and NOT ALLOW people to take more than 1 item (rules) etc. at a time. Some might even suggest that the stores be CLOSED for a few days or a week, until everyone has been EDUCATED (thus, calmed down when they see things start to 'normalize').

Teddy Roosevelt said it best: "The only thing we have to fear... is FEAR ITSELF." "
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