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The Market Carnage and Your Peace of Mind



February 28, 2007 – Comments (2)

When I first became a full-time contributor at The Motley Fool, I used to get up every morning and flip on CNBC before I did anything else. From "Squawk Box" with Erin Burnett and Mark Haines, to "Power Lunch" with my boy Bill Griffeth, and on to "Closing Bell" with that dynamic duo Maria "Money Honey" Bartiromo and Dylan Ratigan, it was all good. I even found Jim Cramer's "Stop Trading" segment midway through the day to have some charm to it.

I think it goes back to when I was in investment banking and I'd wander down the trading floor. There was always so much action -- everyone was shouting, running around, yelling into a phone. It was all pretty darn exciting. And the TVs were always going.

Back to the present day, it took me about a month and a half to realize that I had persistent and scorching heartburn all day long. At first I thought it was because I eat like food is going out of style and I drink too much coffee. But after isolating a few variables I realized that the problem was that darn TV. It was like having an adrenaline I.V. drip in my temple all day long.

Needless to say, I cut it out, and my digestive system thanked me.

So the chain of events that started with Chinese markets dropping 9% (which I saw on Bloomberg's website late at night from the West Coast), continued with the massive decline on the U.S. market, continued with more declines on the Asian markets tonight (it's late West Coast again), and presumably could continue in the U.S. markets again tomorrow was met by me with a -- yawn? Ok, not exactly a yawn -- my personal portfolio took a hit too -- but I couldn't help but think that the sky was not, in fact, falling.

Sure if you're an actual trader or your portfolio is stuffed to the brim with stocks like Baidu (Nasdaq: BIDU), Rediff (Nasdaq: REDF), and First Solar (Nasdaq: FSLR) then you better be on top of every move the market is making. But the true-blue Fools out there know that unless it's your full time job, timing the market is at best a good way to give yourself an ulcer, and at worst a quick path to wiping out your stash. Investing over the long term in strong companies with good financial performance and honest management may not be terribly exciting, but it does stack the odds in your favor.

Business cycles are part of the game when it comes to investing. I'll bet my entire retirement savings on the fact that we will absolutely have another recession. And the recession will be followed by a period of growth. And the growth will be followed by a recession, and on, and on, and on.

If you want some help finding strong stocks to fortify your portfolio, you've come to the right place. You can check out David and Tom Gardner's Stock Advisor newsletter for picks across the market, or Philip Durell at Inside Value for some picks with serious backbone.

Now step back, take a deep breath, take off the trader hat, and go watch something good on TV.

2 Comments – Post Your Own

#1) On February 28, 2007 at 9:34 AM, wunderdawg (81.53) wrote:

This is probably the best advice I've read of late. Stay with the long term "boring" companies and you, (and your portfolio) will live longer.

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#2) On February 28, 2007 at 12:16 PM, TMFKopp (97.77) wrote:


It's not going to win me the "sexiest investing advice of the year" award, but it sure does the trick.

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