Don't Panic, Stick With Financial Plan

Feb. 28, 2007 — -- Tuesday's stock market tumble may have been just a correction and not a crash, but it was enough of a scare to give pause to millions of Americans trying to save for retirement. Financial experts say the worst thing you can do is to start tinkering with your portfolio in reaction to a downturn, no matter how dramatic. Sticking to a long-term financial plan is the best way to avoid being burned, they say.

ABCNEWS.com asked Dick Bellmer, chairman of the National Association of Personal Financial Advisers, to guide the average consumer through the ripple effects of the largest market drop since Sept. 11.

Belmer handles client investments at Deerfield Financial Advisors Inc. in Indianapolis, Ind.

Will the market continue to recover and avoid a recession?

I don't have a clue, in reality, it's the same odds as who would win the Super Bowl next year. We'll have a better indication over the weeks to come.

What happened?

This was just a correction. People got nervous and sold a lot of stock, but today it's up. There were a couple of things that happened. The Chinese market took a plunge and Dick Cheney [who escaped injury in a suicide bombing in Afghanistan], and Greenspan's speech that there will be a recession sometimes in the future. "Okay," they said, "it's time to get out."

But I have not had a single call from a single client. Not one. We've said over and over again: You do your asset allocation and then stick to the plan. The last five years we've had a fabulous run. Obviously our message has gotten through.

Is this the beginning of a recession?

In a recession you have an economy that is contracting instead of growing -- with inflation. There are all kinds of moving parts in the economy. For some people that means businesses aren't hiring. They may be laying off, and you might not have a job. If you are in a company that has a slow-down in production and is letting people go, that hits home. If I am a reporter, and businesses aren't advertising in my newspaper, there could be budget cuts. But if I am a physician, that means nothing.