RENEE MONTAGNE, host:
We have been talking a lot this week about what a volatile Wall Street means for the broader economy. In the next few minutes, we're going to consider what it could mean for you. NPR's Tamara Keith spoke to a few financial advisors.
TAMARA KEITH: When was the last time you checked the movement in your brokerage account, your 401(k) or IRA? Be honest.
With these wild movements in the markets, it can be scary. Michael Mussio is a portfolio manager at FBB Capital Partners in Bethesda, Maryland. The firm manages money for individual investors, many of them retired or close to retirement age.
Mr. MICHAEL MUSSIO (FBB Capital Partners): When they hear the volatility, they're probably logging online into their accounts more frequently, which is probably not a great idea.
KEITH: The phones have been ringing more than usual at Mussio's office in recent days, particularly on those days when stock prices slid dramatically into the market's close.
Mr. MUSSIO: We're seeing a global kind of re-pricing of risk assets right now. Outside of the daily volatility, the thing that's making people anxious is the speed with which we've seen it in the last, you know, 11 or 12 trading days, which is kind of crazy.
KEITH: But Mussio has a simple message for his clients and for the rest of us.
Mr. MUSSIO: Don't panic. If you feel the urge to panic, it's usually that feeling, it's the fight or flight that causes somebody to sell at the bottom and causes somebody to buy at the top.
KEITH: Don't panic. Don't panic. It could be the motto of financial advisers everywhere this week.
Mr. TED DAVIS (Ameriprise Financial): I'm Ted Davis with Ameriprise Financial. I run a financial planning practice in Fairfax, Virginia.
KEITH: Davis says he hasn't gotten as many panicked calls as he might have expected. But he's been reaching out to his clients to keep them calm.
Mr. DAVIS: This is a very emotional time and therefore they need to understand the role that emotions play as they're making investment decisions. But I think we all know that we don't tend to make good financial investment decisions in highly emotional times, you know, whether we're exuberant, you know, or very, very nervous.
KEITH: One of the reasons Davis isn't getting bombarded is he and his clients have a plan. That's the whole idea behind financial planning, after all.
Mr. DAVIS: We're not flying blind. We're not throwing darts at the board. We do have a plan. The world is not predictable, but the plan is built so that we can react to an unpredictable world.
KEITH: Their investments are diversified. Davis says it's not all stocks or all bonds or commodities, or cash - it's a mix, including some that tend to be counter-cyclical.
Mr. DAVIS: Do you want to add some asset categories that are going to zag when the other investments are zigging? You know, you just want to have some offset there.
KEITH: This might include precious metals or agricultural commodities. The key is to have a diverse portfolio so that in a bad patch not everything takes a hit all at once.
Jane Bryant Quinn is a personal finance columnist.
Ms. JANE BRYANT QUINN (Personal Finance Columnist): I've been hearing from people. But of course they say, what should I do now? And my answer is, how come you weren't thinking about this before?
KEITH: OK. So this isn't entirely reassuring.
Ms. QUINN: Stock market panics are normal. This is the third one we've had in the past 10 years. And so when you're looking at what you're doing with your money, and suddenly you say, oh, I'm shocked, look at what's just happened, I say I'm shocked that your plan did not consider the fact that the market would fall as well as the fact that the market would rise.
KEITH: One tip from Quinn: invest a little in emerging markets, like Asia and Latin America. She says thanks to all of this recent experience with falling markets, investors are more prepared this time around.
Ms. QUINN: A whole lot more people plan for bad days now. I think they learned a lot of lessons in 2008, 2009. I don't think they're in such bad shape.
KEITH: And the most important thing now? Just keep saying it: Don't panic. Don't panic.
Tamara Keith, NPR News, Washington.
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