October 13, 2009 9:40 AM
- Text
Dow 10,000: What Should Investors Do Now?
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
The Dow Jones Industrial Average came within 70 points of breaching 10,000 yesterday. Whether it's today, tomorrow, next week or next month, it's worth noting what got us to this place and more importantly, what you should do now that we're here. I spoke about Dow 10,000 with Maggie Rodriguez on The Early Show this morning.
While 10,000 is just a number, it's an important psychological marker too. The last time we were at 10,000 was a little over a year ago, in October, 2008 - the first time was in March, 1999! The return to this level provides some solace that the worst of the financial crisis is behind us. Specifically, stocks have recovered over 50% from the March lows because:
• The economy averted disaster
• Companies cut costs by laying off employees and putting off all unnecessary spending
• The government threw trillions of dollars into the economy
Now that you don't need anti-anxiety drugs to open your retirement statement, the market's move up may provide you with some opportunities. But be careful not to jump in just because stocks are up-after all, the Dow could could return to 9,000 in a hurry!
Still, this is an ideal time to take a moment to consider your situation and create a financial game plan to help you get where you want to go.
Start with a . Over the past year, your personal life may have changed - perhaps your job situation and/or income might necessitate a new approach to your investing. Of course with the massive stock market moves, you should have a better understanding of your risk tolerance.
Once you have that done, you may not want to jump in or out all at once. Here are three general categories of investors who might want to take action as the Dow nears 10,000:
• FRAIDY CATS WHO HAVE LOTS OF CASH: Maybe you sold the top (you're a genius!)...or maybe you cashed out at the bottom (you were panic-stricken). Either way, if you're really ready to assume risk again, then stop driving yourself crazy and dollar cost average until you reach your desired allocation.
• OVER CONFIDENT WHO STAYED IN RISKY STUFF THE WHOLE WAY: The stock market recovery of nearly 60% gives you a great opportunity to trim the massive risk that you have.
• BALANCED INVESTORS: You stuck to a disciplined approach, which is great, but now it's gut check time-was the move a lesson in keeping a little more money in the safe stuff? Could you have taken a bit more risk and been OK?
More on MoneyWatch:
• Parents: Get Your Kid Out of the House
• The Real Reason Gold is Soaring
• Seniors: Is AARP Looking Out for You?
• Fraud Alert: Million-Plus Fake Coins Made in China
• Investors: How's Your Portfolio Doing?
• 29 Fees We Hate Most
(CBS)
-
Jill Schlesinger Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
Follow on Twitter »
Latest Now in MoneyWatch
- Insurers respond cautiously to contraceptive plan
- Judge: Legally, breastfeeding not related to pregnancy
- Budget deficit drops to $27 billion in January
- Why the Powerball Jackpot is part of my investment strategy
- Is the new VW Beetle diesel worth the money?
- Consumer sentiment highlights risks to recovery
- Valentine blues? 10 best cities to be single
- December trade deficit widens to $48.8 billion
- Alcatel-Lucent returns to profit in 2011
- 6 things never to say in a performance review
- $26B mortgage deal: Who gets the money?
- Friendly's CEO steps down
- Quarterly loss hits $3.3B at Postal Service
- Greeks rail against cuts as EU demands more
- 6 things you should never share on Facebook
- Make moves now to increase financial aid
- Valentine's Day: 9 places to save
Latest CBS News Headlines
on Facebook
on CBS News
- Heather Mills says McCartney calls were hacked
- Oscar statues fly from Chicago to Los Angeles
- Oscar statues fly from Chicago to Los Angeles
- TV producer lands in Mexico to face murder charges
on Facebook
- Adele sings a cappella for Anderson Cooper
- Josh Powell had "incestuous" images on his home computer, authorities say
- Adele sings a cappella for Anderson Cooper
on CBS News
