How do I Deal with a Seesaw Stock Market?

What's the best way to handle the up's and down's of the stock market? 'Today' show Financial Editor Jean Chatzky addresses this issue when she answers the following question from a reader:

There have been quite a lot of fairly sharp ups and downs [in the stock market] lately. Should I be concerned that we're headed for a fall? And is there anything I should be doing about my portfolio?

Here's Jean's advice:

Not even the smartest of pundits can predict the future. So, if you need the money in the near term and can't risk declines, put your money in short-term investments like CDs or money market funds. But if you have time on your side, you always need some portion of the portfolio dedicated to stocks — and the market's recent good fortune doesn't change that situation.

Still, you'll want to take a close look at your portfolio given the market's dramatic moves. That's because your asset allocation is probably out of whack. Take a good look at your stock portfolio, since it's probably bigger than it should be now. If it's too high, reallocate your assets. For the moderate investor, a good rule of thumb is to have 40 percent in bonds and 60 percent in stocks. Those with a longer time horizon can add a bigger stake of equities, and those with less time should consider a smaller portion.

Ok, it's general advice, but still it's rather solid. I lean more towards stocks, but I have a 20-year time horizon. Your situation will vary depending on how long before you'll need the money.

Comments

[monty loree]

I am working with a guy who claims to have a stock market investment package that makes you 1% a day on your stocks.

The software analyzes the stock and it's activity and you put in your filters as to what you want to invest in.

The idea is that stocks are guaranteed to fluctuate. All you to do is pick stocks that are going to go up 1%. Once they go up 1% you sell them immediately. Take your money and get on to the next stock.

If you make 1% per day, that's a good income.

The caveat is that you need to do a lot of studying and work before you put a dime into the system. The more you know the better chance that this will work. If you get into it without any knowledge, the software package is not going to work for you, and you'll potentially lose your money very quickly.

Stock market investing software is just a tool to help you. You need to have the wisdom to know if the software is right or wrong.