Money advisers stress patience, diversification

Waning markets, corporate shake-ups and looming global political crises all breed uncertainty and contribute to investor anxiety, said Nadia Cavner, senior vice president for U.S. Bancorp.

Bear markets like this require perspective, Cavner said. "Stay focused. Remember you did not go into this short term."

One mistake people make in trying to guess the market is they forget their time horizon and switch their frame of mind, "forgetting that they're in for the long haul, not the short-term volatility," Cavner added.

Great expectations

Clark Davis, chief executive officer of St. Louis Investment Advisors, said accepting reasonable performance goals for their portfolios and having an informed view of the market is critical for his more than 100 clients.

"A movement in the Dow does not correlate to the portfolio. If you're spread across a bunch of different asset classes, then an S & P, a NASDAQ or a Dow move does not mean the same thing is happening in your portfolio," Davis said.

Turning green

Diversifying one's portfolio to include different investment categories, companies and maturity dates and utilizing a dollar-cost-averaging approach resonated with these advisors as both good advice and as an effective strategy historically borne out by the market.

"A client's portfolio assets should be varied so to be noncorrelated not sharing a high degree of similarity in terms of their movement in the same direction and at the same time with the bulk of their other investments," said Davis.

Dollar cost averaging, or allocating a set periodic dollar amount for acquiring investments, is a buying method favored by Cavner for either seasoned investors or novices.

"Dollar-cost averaging into the market right now ... makes perfect sense" for the opportunities available, Cavner said.

Companies for sale

The up side of a down market is the discounted stock prices that can be found by the savvy investor.

"This market provides, for certain investors, a tremendous buying opportunity," said Roger Hoenes, financial associate with Thrivent Financial for Lutherans.

A chance to get some company ownership at cheap rates is available for those with the cash. Stock prices for equity, growth and value offerings across the board are tremendously down right now, said Eric K. Peterson, a registered representative of Securities America Inc., which is affiliated with Financial Security Investment Advisors Inc.

Alternative selections

John Calhoun, wealth advisor with the Calhoun Group at Morgan Stanley, said "alternative investments" like managed futures, hedge funds and real estate investment trusts can pump up a portfolio's value beyond that generated from the standard fare of individual stocks, bonds or mutual funds.

While some of his clients' account values have declined nearly 10 percent, Calhoun said he has clients seeing managed future increases up to 25 percent.

Legal steps

Dan Malachowski, a certified financial planner with Baron Financial Services, said a no-nonsense disciplinary approach to rich corporate offenders should benefit investor morale in the long run.

"As some of these executives go to jail, I think that's really going to be a boost to investor confidence," Malachowski said.

Davis, however, hoped Congress wouldn't "get carried away with legislation that will hamper entrepreneurial activities out there and risk-taking on the part of corporations." Congress can legislate to the point where it affects capital formation, he added.

Future Returns

In the months ahead, Calhoun said he expects a market return to more normal conditions. He said the days of consistent 10 percent to 15 percent returns are over. "I think the market the next five years is going to average single digits."