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Helpful strategies during a bear market

Posted: December 22, 2008 8:42 p.m.
Updated: December 23, 2008 4:30 a.m.

The past year has been a challenging one for investors and financial planners.

The stock market slipped into bear territory as the nation's housing troubles spread and credit costs pushed higher, while corporate bankruptcies and government infusions of liquidity transformed the financial industry.

Most investors are worried about what to expect next.

Who doesn't?

No one can accurately predict how long a bear market will last or when the economy will stabilize.

Previous articles have addressed how long previous bear markets have lasted, but each is different and this one sure has some unique problems different than any of the previous bear markets and what caused them.

Strategies that can help
n Expand your time frames - focus on your long term planning and look at your portfolio's returns since you bought them, instead of the last 12 months.

n Stay invested - you may be tempted to take your money out of the market during turbulent periods. But trying to time the market can be very difficult.

If you are a monthly investor, such as a participant in a 401(k) plan, you will be buying more shares when the market is down, and this dollar cost averaging proves to be a good system over time.

n Diversification - it is always recommended by most planners to be well diversified in stocks, bonds, and money market instruments to reduce a portfolio's volatility.

And, the new Lifestyle portfolios that address this issue are usually offered by most retirement plans and Fund Companies.

n Variable annuities - this is a product that can offer piece of mind for future income.

A variable annuity can usually fit most anyone's portfolio for some portion of retirement assets for guaranteeing future income, protection of principal from market downturns, and guaranteed growth.

As always, be proactive instead of reactive.

Discuss with your financial advisor what's happening with your portfolio during these turbulent times, how to address the problems occurring, and how best to correct it.

Hopefully, Congress will adopt a solution soon that works to correct the financial markets that won't cost the taxpayers too much, and we can all look forward to a better New Year in 2009!

Jim Lentini is president of Lentini Insurance & Investments, Inc., located in Santa Clarita. His column reflects his own views and not necessarily those of The Signal.


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