Well it is hard to stay optimistic after stocks take yet another tumble and even harder when you look at the charts for 2008. It has been pretty much all downhill this year and the doom and gloom crowd are having a great time telling everyone they saw it all coming. (mind you they saw it all coming in 2006 and 2007 as well as I recall)
Every investor will need to deal with the current situation in their own way and I know this does not sound like very useful advice, but it is true nonetheless. If you have margin loans keeping you awake at night you are in a totally different position from someone who has plenty of cash and is debt free. For some people now could be the time to start building a portfolio whereas for others, it may be time to salvage whatever profits remain. Others may be better off sitting with nice old cash in the bank waiting for things to stabilise a bit…there is no one right way that suits all investors.
Personally I am hanging in there and trying not to alter my long term investment strategy too much. If I picked a stock last year as a long term hold and nothing has changed (apart from the share price) then for me it is still a long term hold and maybe it’s time to pick up a few extra shares. I am quite sure some stocks I have picked will never recover from the hit they have taken recently but these should be covered by the stocks that will rebound, and thus in a couple of years time all should be back to normal. (I hope)
The thing to remember is that much of the money being taken out of stocks is now sitting in bonds and cash etc. and will come back into stocks when fund managers think the time is right. Trying to guess when that will be is risky as you can end up missing the rally, but if you are a long term investor you will catch the rally eventually.