I won't tell you not to be frightened about the recent plunges in the stock market.
The U.S. economy has a lot of problems. Unemployment, while showing some decline, is way too high with millions still out of work -- and that's just the folks the Labor Department is counting officially.
You may not understand the economic crisis in Europe, but you know it's not good.
So to tell individual investors not to be scared when the Dow Jones industrial average drops significantly on consecutive trading days is like expecting audiences watching a horror movie not to scream or grab their neighbor's arm when the stabbing rhythms of the musical score intensify.
Of course you shriek or become terrified when the money you've been saving for retirement or for your child's education is at risk. It's your hard-earned money. Go ahead and scream.
However, the stock market, just like a horror film, has a time-tested pattern of scary and calm moments, ups and downs.
Hang tough. The horror will end.
"Just look at the market's performance over the past 100 years -- through recessions, depression, wars, bubble bursts, etc. It always recovers," said Ernest Burley Jr., owner of Burley Insurance and Financial Services in Bowie, Md. "Sure, there are hiccups and corrections, but look at what happens afterward."
I know you've heard this before from people who stand to gain from your continued trust in the markets. But really, what choice do you have? Cash out?
Unless you need your money in the near future for current expenses, if you withdraw it from your investment accounts and stash it in an abysmally low-yielding savings account, you're guaranteeing a loss because of inflation.
Investors need to keep in mind the incredible point losses that occurred when the market plunged following the 9/1 1 terrorist attacks, notes Kelly Campbell, founder and president at Alexandria, Va.-based Campbell Wealth Management. The Dow fell 1,370 points in the week following 9/1 1.
"Within three months, it was back up to the pre- 9/1 1 numbers," he said. "Selling and going to cash would have locked in your losses."
What about taking it all and fleeing to bonds?
You can lose money in bonds. Ivory Johnson, director of financial planning for Maryland-based Scarborough Capital Management, asks a good question: "If you have a bond paying 5 percent and interest rates go up to 7 percent, who will want your 5 percent bond?"
Should you put all or most of your money in gold? Gold shot up to a record $1,778 an ounce Tuesday after Standard & Poor's cut the U.S. long-term credit rating from AAA to AA-plus.
Johnson believes most investors should have gold as part of their portfolios. He places his clients in a gold exchange traded fund, which buys interest in a trust that has physical possession of gold. An exchange traded fund is an investment fund that tracks an index, a basket of assets or a commodity such as gold. It is traded on stock exchanges, much like stocks.
But here's a caution about investing in gold. You are being reckless to put all your money in gold or, for that matter, in any one asset class, stock or bond.
"We don't view gold as an investment in the sense of investing in a business with a product, management team, growth prospects," said Charlottesville, Va.-based Wistar Morris, principal and senior client strategist at Signature, a wealth management firm. "A few of our clients have bought a few gold coins or bars as the ultimate insurance in case of financial Armageddon. We don't discourage that in modest sums relative to the portfolio if it helps someone sleep at night."
It's worth the money to have access to good investment advice. And firms offer various price points to help every level of investor. For example, at Scarborough you can get active management of your workplace retirement plan for an annual fee of $365. Advisers help you develop a plan using the choices available in your 401(k), 403(b) or thrift savings plan. Burley charges $250 for a basic two-hour investment advisory session.
If you want to do something to get through this latest horror show on Wall Street, seek good advice, get a solid financial plan and stick to it.