Financial advisers see better market

ORIGINALLY WRITTEN JERRY ENGLER
What should you do with your nest-egg money?

Day after day since the 9-11 attack, you hear of a stock market that has declined beset with uncertainies and scandals.

But it also could be a time for great opportunity, right?

“Buy low, sell high” should be a cardinal rule of how to make money in a free economy. Maybe it’s a good time to buy stocks and mutual funds.

That’s right, local financial advisers said, but do it in a disciplined manner over time.

Your willingness to invest even has something to do with your faith in a future. Some of the advisers, like Tom Kimbrel, with Edward Jones in Marion, said that if a United States of America is going to continue to exist, so is a stock market with all its ups and downs along with all of the rest of the nation’s financial institutions.

Kakim Kunantaev, with Mennonite Mutual Aid in Hillsboro, said the decision on whether to invest right now should have more to do with your personal goals and situation.

“If you’re looking at a long-range plan over some years, it’s a good time to invest,” Kunantaev said. “If someone is really short-term, maybe two or three years from retirement, they might want to look at bonds or something more fixed.”

Financial advice needs to be individually oriented, with stocks and mutual funds added as part of a package to increase diversity and reduce financial volatility, he said. A young person with a lifetime to save can even look to a monthly contribution to a mutual fund as a possible wealth-builder for later life, he added.

Diane Claassen, with Claassen Financial Services in Hillsboro, said you call that monthly investment “dollar-cost averaging,” and it’s the best way to invest for most people. You spread your risk because some months you are buying fund shares at a lower rate and some months at a higher rate as the market rises and falls.

Kimbrel said that, over time, dollar-cost averaging actually lowers the average cost you pay for a share of fund. Historically, he said, mutual fund investors have ended up with 10 to 15 percent gains on their money.

Andy Shewey, with American Express in Hillsboro, said that for the dollar-cost averaging investor, these times make no more difference in the investment program than when times are good.

The gains for the long-term will be there, he said.

In general, the advisers said, the longer time frame you were able to invest over, the more you were able to spread any risk, and the more you were able to gain.

That said, Kunantaev pointed out that the Federal Reserve Bank has lowered the prime interest rate 12 times over the last year and a half while inflation has stayed low and employment high.

Claassen said, “I just now have in my hands in front of me” a report saying the market has shown “great resiliency,” and should begin improving soon.

Kunantaev said: “I see people lined up when stores have sales. Right now stocks are on sale so improvement should begin.”

All of this shows the economy has stayed good, and the stock market is being driven by emotions, and not by economics, Kunantaev said.

Loren Funk, with Waddell & Reed at Hillsboro, defined those emotions as fear and greed, as speculative investors try to buy for short-term profits or withdraw from the market to cover losses.

“There’s too much focus on current gains and losses, and on too many people who got in too late to benefit on the last great period of gain,” Funk said.

“I’ve been in this 38 years, and there are always market trends one way or the other,” he added. “If you’re invested, this is a time to stay on the train because if you jump off, you’ll get hurt.

“It’s also a great opportunity to get some shares worth the money, but do it with saving as a way of life, always putting some away every month. When you buy shares of a mutual fund, you’re investing in the country, and I’ve seen it do great things for people over a number of years.

“American industry is the foundation of the entire country. I’ve always been proud to sell American companies to Americans. They provide the jobs and the taxes for our people. There has to be corporations to do the work we need done.

“There are always changes, jobs created or people being laid off, the births and deaths of companies. Technology always changes industry. Sometimes companies simply have too much debt. The clock is always ticking one way or the other.”

Kimbrel said, after giving all the admonitions on how people should save, that recent stock market losses have been 20 to 30 percent, and that all stands to be gained back.

“So right now is a darned good time to buy,” he said.

“We see all the doom and gloom on television, and all the bad press given to the market. But if you buy a quality product, there’s not much chance you’ll go wrong. I have total faith in America.”

Kimbrel pointed out that while the 9-11 terrorist attack was a difficult time to go through, it has not been the only difficult time in American history.

He said that in the 1960s and first part of the 1970s, the United States was fighting a war in Vietnam, contending with division at home with huge anti-war demonstrations and even college students killed by national guardsmen, undergoing racial civil rights campaigns that sometimes resulted in riots, had one president assassinated and another forced to resign, and had rapid technological advances that resulted even in putting a man on the moon.

Yet if a person had invested in stocks and mutual funds during those times on a regular basis, had invested in America, he probably would be well off as a result today, Kimbrel said.

“In 1982,” he said, “we saw the beginning of the biggest bull market we’ve ever seen that ended in 2000. If someone sat on the sidelines through that, they missed a bunch.

“The true investor has to go against psychological feelings, and follow discipline. It can be a tough thing to do. When I get my paycheck some of it is put into my 401K every month.”

Kimbrel said he liked the quote from a wealthy person on investment advice: “To be fearless when others are greedy and greedy when others are fearless. In other words, don’t follow the crowd. If they’re all buying, it’s time to be selling or vice versa.”

Kimbrel said that many of his customers don’t realize that many individual stocks can be purchased monthly in small investment increments just as mutual funds can be.

Claassen said final advice should always be for you to invest at your own comfort level, and to remember that its the productivity increases of the companies that keeps the economy growing over time.

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