Financial experts seem to be in agreement that we are now in a bear market, but will that bad news shake investors traditional buy-and-hold strategy with 401(k)s particularly older investors?
A bear market is particularly bad for Baby Boomers approaching or in retirement, especially if this turns out to be an extended economic downturn. Boomers are afraid of bears, writes Gail Marksjarvis of the Chicago Tribune.
The average bear market drop is about 27%, she said, and if the optimists are correct, we are probably near the bottom. Selling everything after a 25% loss is a mistake, especially if the market rallies unexpectedly. But its not so easy to convince investors who are watching their savings vanish.
Sue Stevens, a Chicago financial planner, recommends that worried investors sell only a small portion perhaps 5% to 10% of their equity mutual funds or move their money into a Treasury inflation-protected securities fund.
Pessimists like James Bianco of Bianco Research argue that the causes for the downturn are the housing and financial crises, and until those ease up, the bear market will endure. The economy cant expand if people cant borrow money to make purchases, he said, and record high oil prices arent helping, either.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.