Market making you queasy?

No time to panic,
Experts say this is a good time to reassess,
but not to make rash moves

Anyone who’s been following the stock market recently could be forgiven for having that feeling you get in the pit of your stomach when you board an especially dizzying roller coaster.
After all, investors have been taken on quite a wild ride in recent weeks, with shares first soaring, then falling, at what seems like an alarming rate.

After surging to close above a record 14,000 on July 19, the Dow Jones industrial average plunged more than 500 points over the final two sessions of the week amid fears about fallout from problems in the nation's housing market.

Investment experts warn that a period of major stock market volatility is no time to make rash decisions. But it can be a good time to evaluate whether you have been making the right investment decisions for your stage of life and long-term financial goals, they say.
“I’m telling people to panic — just kidding!” said Russ Kinnel, director of mutual fund research for Morningstar.

In reality, Kinnel said his first piece of advice would be to do the exact opposite of panicking —put things in perspective. “It helps if you have the right mindset going in,” he said. “If you recognize your investments in equities as long-term investments, I think that helps you get through these times.”

That said, Kinnel said a topsy-turvy market can provide a good opportunity to decide whether you do have the right mix of investments to suit your needs, even if you don’t plan to cash in mutual funds or other investments for years to come.

For example, an investor who has an especially heavy concentration of holdings in small-cap stocks, real estate or low-rated junk bonds may realize, after this recent market fluctuation, that it’s time to rejigger that portfolio to a more diversified mix.