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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: maceng2 who wrote (171954)	6/11/2002 6:59:33 PM
From: maceng2	Read Replies (3) \| Respond to of 436258

Advice.. If in doubt.. freeze like a deer caught in the headlights of an oncoming 18 wheeler -g- cbs.marketwatch.com High anxiety Commentary: What to do until the 'final capitulation' By Paul B. Farrell, CBS.MarketWatch.com Last Update: 12:12 AM ET June 11, 2002 LOS ANGELES (CBS.MW) -- Are you anxiously awaiting the "final capitulation" -- that one brilliant moment when all holdouts finally surrender and sell off their losers? Are you considering defeat and planning to dump your own dogs? Or perhaps you're still so shell-shocked, you don't know what to do. When in doubt -- don't. That's right, when you're not sure about the collapsing market, the economy, your strategy, news gurus, or the advice you're getting from your broker, adviser and barber; when you really aren't sure what the hell's going on anywhere in the world -- don't do anything! Will 'doing something' relieve anxieties? Doubts? Fears? Anxieties? Our nerves are on overload. Every broadcast, every newspaper triggers more fears with an endless barrage of bad news: Collapsing markets. De-listings. Corporate sleaze. Accountants on trial. Increasing federal and state deficits. Threats of nuclear war. FBI and CIA bungling. Not to mention the President and Congress fighting like school kids while terrorist threats lurk in secret. Meanwhile, your portfolio's dropping ever further. What should you do? Can you recover the losses? Ever retire? Should you buy gold? Or sell everything and go to cash? What should you do? For starters, chill. High probability of anxious mistakes Decisions driven by emotion breeds mistakes. Usually big ones. Behavioral finance experts remind us that anxious investors believe action will relieve their anxieties... so they seize control... do something... anything to relieve the doubts. Big mistake. Study after study reveals anxious investors buying at the peak and panic selling at the bottom. Whether it's the fear of missing out on big profits, as was the case for those who rushed to tech at the end of 1999, or frightened folks who're selling every stock they own -- potentially missing any rebound when it finally arrives -- letting emotions rule important investment decisions is just bad news. How to avoid sabotaging your portfolio -- and sanity If you really can't seem to help yourself, here are some suggestions that just might help you to defer damaging decisions until calmer minds can prevail. Defer action: That's a principle that worked for me years ago when I counseled people threatening suicide. Get them to defer their decision. Help them get past the moment. Give the panic a chance to subside so their mind can think more clearly, later. Stop and read something Read a book about dumb mistakes investors make. Here's my recommendation: When the anxiety to "do something" like sell hits you -- get in the car and go to your local bookstore and buy Larry Swedroe's new book, "Rational Investing in Irrational Times: How To Avoid The Costly Mistakes Even Smart People Make Today." But don't buy it on the Web. I want you to avoid making decisions. And just getting out of the house is a perfect avoidance action. Swedroe has a very calming way of helping investors through crises. He'll help you defer costly decisions -- and more importantly, avoid future mistakes. Get on your knees and pray Before you act, say a prayer. It works for John Templeton, and maybe it'll work for you. Here's Templeton's 22nd principle of investing: "If you begin with prayer, you will think more clearly and make fewer mistakes." That's your goal -- fewer mistakes. So get on your knees and pray! You heard me! And if you're embarrassed that somebody will see you, lock yourself in a room away from prying eyes. That's what I do. It works. My favorite prayer for anxieties is the Serenity Prayer: "God grant me the serenity to accept the things I cannot change; the courage to change the things I can; and the wisdom to know the difference." And if you're still in doubt -- do nothing. As my Zen master says: "Sitting quietly, doing nothing, a bottom will form and the market will recover." No doubts? Then go contrarian and buy! And if you're one of those rare investors with no doubts and mucho optimism, remember this other famous Templeton maxim: "Bear markets aren't forever. Outperforming the majority of investors requires doing what they are not doing. Buy when pessimism is at its maximum." Like now, when investor confidence is lower than the floor you're kneeling on!