In a bear market, concentrate on mutual funds, diversity


In a bear market like this one -- Dow Jones industrial average down 1,722.43 points, or 18.4 percent, from its peak -- many people understandably find it hard to summon courage to invest regularly. How then can you find "bargains" on Wall Street?

"Take advantage of a company-sponsored savings plan such as a 401(k) where you choose mutual funds," says the Clifton, Gunderson CPA Newsletter. "With funds you can have a specific amount of money automatically withdrawn from your bank account and invested in fund shares."

FROM THE MASTER: In a "down" market, how should you diversify your investments? Sir John Templeton, widely regarded "The Dean of International Investing," says, "If you diversify among different forms of wealth, nations and industries, you'll be safe in any market in the long run. The only investors who should not diversify are those who are right 100 percent of the time. People don't remain pessimistic forever."

CHEERFUL SIDE: With so much gloom and doom around -- Wall Street opinions about 80 percent bearish -- let's look at the brighter picture: "The Dow will end the year above 9,300," says Abby Joseph Cohen, chief strategist, Goldman Sachs & Co. fTC Cohen has a fine forecasting record.

Business Week, Sept. 7, says, "Sure you may feel like bailing out, but if you have long-term goals and carefully selected your stocks and funds, short-term market gyrations shouldn't be your No. 1 consideration."

LOOKING UP: "I'm primarily a stock investor, with 90 percent of my investment assets in equities." (Peter Lynch, former manager, Fidelity Magellan Fund)

"Eighty percent of the time, it pays to be an optimist." (Sam Hopkins, retired partner, former Alex. Brown & Sons Inc.)

Pub Date: 9/11/98

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