Markets are Down, Time to Buy

So, seriously, the market is heading for a downturn. Housing down, stocks in general down, we're bleeding money to the Iraq war (over $250 million dollars PER DAY). So, what's the average Joe or Jane investor to do?

DON'T panic sell. It happens with every market downturn. People panic when they see their accounts going down and they sell. If that's your pot of money that you need to use in a year or two for something (college, car or home purchase, etc), well, selling might be the right decision. You may need to lock in your gains and avoid further losses. But, if that's your retirement account that's going down and you're nowhere near retirement age? Let it ride!

DO purchase bargains. When the market goes down, it's like a fire sale for those with some free cash they don't need to access for some years. If you have some sitting around in a savings account, now might be the time to take care of setting up an investment account. For those with a Costco card, Sharebuilder (now owned by ING) is offering a bonus of up to $90 on a new account (you must make a deposit and one trade to secure the bonus).

DON'T become obsessive about checking up on your account. If you've chosen your investments with care, you'll have chosen stocks and funds that you like enough to hold for the long term. If that's the case, just let them be. For buy and hold investors who aren't planning purchases, times like these are a good time to take a break from market watching. Hey, the Super Bowl is coming up, how about those Giants?

DO keep an eye on the big picture. The market goes up and it goes down. It's a cycle. Consider doing some reading on historical ups and downs. Read about the Great Depression, pick up a book by one of the great economists (here's a cool timeline, hosted by the Federal Reserve Bank of San Francisco) or learn about another country's economy, say South Korea or Taiwan.