Stocks Still Not For the Faint-Of-Heart

July 14th, 2013

Even as the stock market reaches new record levels, many cannot forget the dramatic market fall that began in October 2007 and continued until … well, perhaps today.

Today,  financial indicators vary greatly. Stocks have soared. Housing sales have picked up as well. But unemployment levels remain high, manufacturing hasn’t recovered, and interest rates are on the rise.

Many investors consider the market still highly volatile but optimism abounds. In the past, optimism alone often led to rises in the market. Today, after more than five years of slumping employment and anemic economic growth, optimism by itself won’t do much to alleviate market fears.

Investors, especially those who are approaching retirement age, are especially cautious when it comes to full re-entry into the stock market. Simply put, many investors can’t afford to take the market hit encountered in 2007 and the years that followed.

There’s still a vivid memory of what happened in 2007 and the impact on people’s portfolios. It takes some strong will to jump back into the stock market with the same gusto and enthusiasm as before.

Investors scared by volatility often retreat to lower-yielding fixed income instruments. For many, the lesser return is an appropriate trade-off for added security. Memories are short but not that short. Market volatility has left a bad taste lingering.

Even with uncertainty there is still a place for a balanced approach to the market. We don’t advocate stashing money in a mattress. A good investment strategy is one that takes market volatility into consideration along with personal financial conditions, goals and objectives. Nothing takes the place of good planning and investment stewardship.

As we head toward the dog days of summer we hope that the economic downturn of 2007 continues to become a fading memory. Until then, we’ll be here helping our customers with all their banking needs.