Patience. That's my answer to every question I get concerning the key to surviving our current economic crisis. Too much focus has always been placed on what happened today.
Investing for retirement is a long-term process. You'll spend 20 to 30 years accumulating your retirement nest egg and another 15 to 20 years spending it. That's a very long period that will see many highs and lows. So don't give in to the short-term hype that the financial sky is falling.
Yes, I said short-term hype.
Keep in mind that the majority of the market's rapid decline has happened since Sept. 15. That's just over three months. And don't forget that during that time, the market also had several of the largest one-day rallies in its history.
Comparing today's economic highs and lows is like comparing Mount Everest with Death Valley. It makes for a great story, but an unfair comparison.
Look at the banking industry. Despite stories of impending doom, banks are still lending money. They have to; it's their reason for being in business. Banks are now just lending money to the people who can repay the loans. It's a business practice many of them ignored in the good times.
If you're an investor, you've got to avoid the "noise" of these so-called experts, who drone on and on "predicting" what the market will do. If they really knew, why didn't any of them tell us in August that the market would be in this situation?
That's because the principles of investing are pretty basic and somewhat boring. They're exactly the same whether the market is at an all-time high or an all-time low.
The key in any economic climate is to remove your emotions from any financial decision. When you look at an investment, are the financial fundamentals sound, so that you would buy it at any time?
If the price has been beaten down, but the underlying financial foundation is good, you'll be purchasing an investment at a "sale" price. That's the system that wealthy investors like Warren Buffett use to make their billions.
And if you look at one of America's previous economic stock market disasters such as 1980, 1984, 1987, 1990, 1994, 1998, 2000 or 2002, many people made millions buying beaten-down stocks from people who were panicking and selling them at falling prices.
You have to have a mix of stock and bonds. Never have all your money in the market because you need some protection from the market downturn. On the other hand, never have all your money out of it because you'll lose the opportunity to create tremendous wealth as the market goes up.
Investing at this point in time comes down to this: If you believe that our American way of life will be here in years to come, keep investing in that investment with sound financials. They will pay off for you in years to come.
Joseph Curatolo is president of Georgetown Capital Group in Williamsville.