They turn and see an angry bear headed right for them and moving fast. One camper reaches into his backpack for a pair of sneakers and calmly begins to lace them up. Here are some thoughts from the Forum for Investor Advice on how to react when the market growls, and how your financial advisor can help. The bear may not affect you. The only share prices that matter to you are those of the shares you own.
Diversification makes a difference.
If you're invested in mutual funds, you've spread your risk among dozens or even hundreds of stocks. Your fund's managers always keep a portion of assets in cash and typically increase the cash position when the securities markets offer few good opportunities. Investment income cushions market downturns. Prices of securities change continuously, but dividends and interest are generally much more reliable. Companies that pay dividends or interest often go to great lengths to maintain stable payouts during market downturns.