Top Planners Weigh In on What to Do Now

So, maybe you thought in these salad years of 20 percent-plus average market returns that you’re an investing genius and a natural do-it-yourselfer.

Or, maybe you thought all that yammering from your financial planner about, “Diversify, diversify, diversify,” seemed like so much old-school hooey. Is that your final answer?

Market Wake-up Call As the market events of today and, indeed, the past six months show, the market punishes those who disregard long-held investing principles. Today’s market is a wake-up call to those investors who thought that high double- and triple-digit gains were the norm for the stock market. If you’ve heeded your planner’s advice on diversifying, you’re probably weathering the storm OK, but if you just couldn’t resist the allure of pricey growth stocks, you might be feeling some pain.

What do you do now? That’s a question investors across America would love to ask of the best financial planners out there, if only they had access to them. Well, now you do. We surveyed some of the tops in the business about what they’re telling their clients today. Here are the results.

A Healthy Correction

Marilyn Capelli Dimitroff , a certified financial planner at Capelli Financial Services in Bloomfield Hills, Mich.: Dimitroff is telling her clients to stay the course and thinks the market drops could even be a good buying opportunity if an investor has some new money to put to work. “The best advice is to stay put,” Dimitroff says.

“The market occasionally has these bumpy periods and that’s the price you pay for getting the returns.” Though she favors equities over bonds, Dimitroff says she urges investors to keep a fixed-income component, namely short-to-intermediate-term high-quality bonds in their portfolios to cushion the blow of rough markets. The planner also thinks the market’s correction is a healthy reaction to what she considers some overvalued stock prices over the past few years.

“I do think there could be a period where stocks will underperform for a long period of time,” says Dimitroff. “What we’re seeing now is a result of a lot of factors that have been out of whack from some time. We will start from a lower base, but I still think the market has a lot of strength.”

Post-election Upside

Michael K. McMahan, certified financial planner at Raymond James Financial Services in Gastonia, N.C.:

Though McMahan thinks the market has not seen the bottom, he does think this year’s declines could be followed by a long period of gains on the stock market, especially if the new president, be it Bush or Gore, comes through with some tax cuts that will put more spending money into the economy.

“I don’t think we start a major march to the upside until after the election,” says McMahan.

So naturally, McMahan says now could be a good opportunity for those people who are not fully invested to delve into the market for some bargains right now. And those who are fully invested? Just stay calm, he says.

“If you are invested in good quality stocks and bonds and they have gone down in value, don’t worry about it,” he says.

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