Your Money: Should You Be Preparing for Another Market Downturn?

Dennis G. Murray, MA

August 12, 2011

Introduction

Do fears of a plunging stock market keep you up at night?

Thanks to our recent debt-ceiling crisis and Standard & Poor's downgrade of the US credit ratings, investors are again getting nervous.

The last major downturn -- a teeth-grinding, jaw-clenching 56% drop in the S&P 500 from October 2007 to March 2009 -- is a not-so-distant memory for a lot of investors.

The market has generally rebounded to where it was before the most recent debacle. Yet with the continued uncertainty in the global economy, and piles of debt here in the States, it all feels a little tenuous, as if the markets shouldn't be doing as well as they are.

So will the "recovery" last? Or are we destined to do some serious backsliding over the next year or two?

To answer those questions, we turned to our financial experts. While they prefaced their comments by stating that they don't have a crystal ball, they did have some ideas for what you can do to protect your money in the event that another financial tsunami has you scrambling for higher ground.

Retiring Soon: Stay the Course, or Get More Conservative?

As the market has shown us over the years, if you invest for the long run by adding money regularly and staying calm when others around you panic, you'll generally do well. "I don't expect a repeat of what happened a few years ago," says Lewis J. Altfest, CEO and Chief Investment Officer of Altfest Personal Wealth Management in New York City.

"The banks have been refinanced and won't take as much risk going forward," says Altfest. "Investors we speak with are concerned but not overly nervous. They've been through it before."

That may be small comfort for those of you who plan to hang up your stethoscope soon. It typically takes years for the market to reach preplummet levels. With retirement coming on, you may not have time to weather another storm.

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Cite this: Dennis G. Murray. Your Money: Should You Be Preparing for Another Market Downturn? - Medscape - Aug 12, 2011.

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