When PIIGS Fly: Why You Should Root For Stock Market Drops
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
The main culprits of the recent sell-off are those European PIIGS. No, not those nasty guys who whistled at us 20 years ago on Rome's Spanish Steps. These PIIGS, Portugal, Italy, Ireland, Greece and Spain, are all facing skyrocketing debt levels. Why should we care about the PIIGS? The fear is that if one country were to default on its debt, it could trigger a Lehman-type domino effect to other countries with shaky economies.
Many are wondering if the drop below 10,000 should prompt them to make changes in their portfolios. Before you fall prey to your emotions for the trillionth time, ask yourself:
• Should I really be selling?
• Has my risk tolerance changed?
• What's my game plan?
Chances are the answer to these questions are: no, no and I don't have one. To combat the last issue, here are a few tips/reminders:
• Stop whining: market dips help long-term, disciplined investors. When the market drops, you buy at lower levels - that's a good thing!
• Be self-reliant: don't count on the stock market to save for your retirement - get a plan now. The best way to weather the ups and downs of the market is to save more
• Stay your course: don't get spooked by market fluctuations
• Educate yourself - there is no magic man behind the curtain who knows what's going to happen next ... take control of your financial life
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