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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (47261)	4/19/2000 8:21:00 AM
From: Benkea	Read Replies (2) \| Respond to of 99985

Think ECrap had difficulty collecting on margin calls? I got this e-mail from them (I keep $10 bucks in a couple of accounts there so I can use them as a back up emergency quote service) Dear X: I wanted to share some thoughts with you regarding what we all need to keep in mind as investors during periods of market volatility. No one can deny it, the market has recently moved sharply in both directions. However, for almost a decade, there has been an undeniable upward trend, as the U.S. economy enjoys the benefits of the longest expansion we have ever seen. We're still benefiting from unemployment and inflation rates that are well below their historic averages, and productivity growth continues to be near historic highs. Especially in times like these, it's important that all investors, myself included, need to take a step back to think about where we've been and where we're going so we don't overreact. Your investment lifetime will include a number of market cycles. How you react and manage these cycles will have a major impact on your success in building wealth over the long-term. Here are some key points to remember. Stocks Are Long-Term Investments Investing in individual stocks and stock mutual funds is investing for the long-term. What does long-term mean? At least three or more years, ideally five years or more. Trying to time the market has been shown to be futile. While stocks in the short-term may provide investors with an uneven ride, over the long-term, stocks can outperform other types of financial instruments like Treasury Bonds. In addition, stocks provide investors the best opportunity to beat inflation over the long-term. Always Consider Risk Different people have different risk tolerances, depending upon things such as age and income. Your risk tolerance and short and long-term goals should be important factors in determining what you buy and sell. If your goals are short-term, like less than one year away, it may be wiser to invest in a less risky instrument like a money market fund. Just keep in mind the relationship between risk and reward. Lower risk frequently translates into lower reward. Also, remember that what your friends invest in may not be the best investment for you. It's best to invest in companies you understand and are familiar with. Your research can help you appreciate their long-term potential. At ETRADE© we have the tools and insights you need to research and understand various companies. Don't Forget to Diversify Over the long-term, it's wiser to diversify your investments over several asset classes (e.g., large cap, medium cap, and small cap stocks) and sectors (e.g., technology, health care, and utility) than to put all your investments in one particular part of the market that may be doing well at that moment. So when one part of your portfolio isn't doing as well as you'd like, it's counterbalanced by another part of your portfolio. Mutual Funds can help you diversify, since professional managers may invest in areas of the market you're less familiar with. Don't forget that international diversification is also important, as overseas markets may not move in tandem with domestic markets. Educate Yourself In my prior letter, Facts for Online Investors, I mentioned how you can find a wide variety of educational resources on the ETRADE site. One of the most important is our Knowledge Center, which offers a wealth of information gathered from famous books and authors whose views have shaped the modern world of finance. The Knowledge Center also includes information from other Web sites, which can provide you with valuable resources. In looking through it this weekend, I noticed three articles of particular relevance during these times: The Stock Market Cycle The Importance of Diversification What to Do When a Fund Fizzles Because we understand that each of you has different goals, ETRADE provides a diverse set of products to help you achieve those goals, including stocks, bonds, mutual funds, and IRAs. We now also offer bank products, which are FDIC insured, through ETRADE Bank(SM)1. Check out the CD's with rates in the top 1% nationally2! All of us at ETRADE really do appreciate your business. We will continue to work hard to provide you with the very best products and tools to help you make informed investment decisions during every phase of the market cycle. In the meantime, remember to think long-term! Sincerely, Christos M. Cotsakos Chairman of the Board and CEO ETRADE© Group, Inc. ______________________________________________________________ 1ETRADE Bank is a division of Telebank, a wholly-owned subsidiary of ETRADE Group, Inc. Customer deposits are insured up to $100,000 by the FDIC. Deposits held at ETRADE Bank and Telebank are not separately insured by the FDIC. Telebank and E*TRADE Securities, Inc. are separate but affiliated companies. 2According to national rate information published by bankrate.comSM, a division of ilife.com