Pin Money Club

Since I have a passing acquaintance with the financial services industry, a lot of people have been asking me for advice. First, let me say that I am no FDR and that although I lived through the 80’s junk bond meltdown (Michael Milken’s bad toupee gave us a lotta material for laughs), the crash of 1987, the Savings and Loan debacle and the tech bubble blowout of the early 00’s I have to confess that I have nothing to compare this to. But, I do believe like FDR that fear is our worst enemy and can cause us to behave badly! So here are a few calming strategies you can employ.

Channel FDR – panic will do you no good - take a deep breath - in-out, in-out, in-out – whew, that’s better!

Arm yourself - with knowledge, not hype. Turn off the TV – it won’t help you stay calm with every overly-bobbed news anchor in the country shouting that you need to convert all your assets into gold bars, build a bomb shelter and then hide all that gold under the proverbial mattress. I recommend that you read the Wall Street Journal and nothing else…

Take inventory – Review your individual investment portfolio. Remember, it’s not what the broad markets are doing, it’s what your individual investments are doing.

If they are currently down in value and you need to tap into those assets sooner than later, stagger the sale of any securities – selling only those shares you need to meet your current financial needs - to leave any remaining shares as much time as possible to recover lost ground.

Review your investment time horizon - Think about how long before you need to cash out any of your investments. Even in the midst of a macro crisis, the market’s individual sectors still move through up and down cycles – and yes, this is indeed a doozy of a macro crisis - even so, if you still have five or more years before you need to access your assets, do your best to stay put. Keep in mind too that any assets you have in a retirement plan such as a 401(k) or TSA plan are meant for the long term and so should have more time to recover. Remember, until you sell a security, your loss is only on paper – once its sold, then you have a realized (or real) loss in your pocketbook.

Talk to your tax advisor – If some securities in your portfolio are currently in a loss position, consult your tax advisor. Depending on your own personal tax situation, realizing some losses in 2008 could make sense.