Smart Investor: stay calm and investing is simple

Hmmm,all well and good, and of course,assuming one has a meaningful amount of cash on the sidelines to invest when prices are low!

It doesn't always happen like that,'cos for most people life ain't that straightforward and simple!

A good article, nice to get a reminder of what we know we should be doing. Its easy to stray in times like these.

My mistake is always to hang on to a rising share too long, and not to sell when I have a good profit . I have been caught out too many times by sudden drops .

On the other hand I have never sold during market panics because many so called experts are the first to show the whites of their eyes, and anyway one hasn't lost anything until one joins the panic.

True Derek as we are sitting on some losses and we do not have enough funds to buy cheap.

This article makes a good point especially for the long term investor. The problem is the changing world order: if the west ends up like Japan and the Far East/Latin America become the power houses of the world economy, most of us will be invested in the declining economies. Meanwhile if you are brave enough to go with the new markets/economies on any scale, you are dealing with much more volatile markets and perceived short term risk - hardly the place for widows and orphans or indeed most of us who will need to fund our old age.

Given the banking situation and the inability of our politicians to make sound decisions and the west's obsession with borrowing we are all between a rock and a hard place. The only redeeming thing is that the UK has some of the worlds most innovative and successful international companies and we will just have to hope their management remains really focussed on where they can make money internationally.

None of this of course allows for the other thing that is changing in our world - our climate and this could have some huge implications too. Whether or not you are a sceptic about what is causing climate change, there is no doubt is happening and I just wish we could all stop arguing about it and move on to working how we will adapt - the potential for environmental change is huge and no one seems to be thinking very clearly about this just now. eg what is the point of investing in a massive new airport on the Thames if sea levels are going to rise and cause serious flooding.

It is quite hard to remain positive about all this and I can see why we seem to be talking ourselves into depression too.........still trying to be 'half full'.....

OLD BROKER ....sound reasoning .

Also regarding the new Thames airport, last night's Frozen Planet on BBC, showed graphically the extent of the melting of the ice caps, and estimates for sea rises of .5 of a metre . Still, looking on the bright side, it will be a massive opportunity for seaplane designers.

I take my advice from Investors cronical..is this OK? fITZ

Yess Fitz ....but there are so many recommendations in Investors Chronical that one is spoiled for choice . Almost like a restaurant with a huge menu. How does one choose ?

It does no harm to state the obvious from time to time. Unfortunately to be reminded of this perceived knowledge does little to actually change our behaviour methinks! I am 80% invested and followed the FTSE 100 all the way down from 6200 to 5100 and am still sitting on 20% cash as we close at just under 5500. I will probably buy in at 5700 and think myself a clever chappie, unless and until the markets fall back to 4700 or whatever! Oh well I will console myself with the reassurance that they are still investments in sound strong well managed companies (like RBS, Lehman Bros, Equitable Life, Northern Rock, Lloyds, American Airlines etc) and that it is time not timing that dictates returns!

A good article.......a good time to "average out " ....for those who didn't sell at a profit (buy on the dips) and sell on the spikes....if not sure, just do half....

BUT DO SOMETHING.....profit is only a profit when taken......so don't be frightened to sell or HALF and buy back on a dip....especially in these Markets.

OR....on any strength....SHORT a small position on the Indices via an Exchange Traded Fund (if you don't like selling your shares).....and of course you won't always get it right....as mentioned in the article....but this system does go a long way to smooth your overall performance....TRY IT.

PAUL WILKINSON .... sound advice . Will give it a go . I have a few that are still in profit .

Derek - I like the idea about sea planes - made me laugh - thank you

Thank goodness it is true that the real accounts and the real business are so much less volatile than the share prices of companies!

It's clear looking backwards that is has always been a good strategy to buy when the market is lowly rated and hold until it recovers. While the past may not be a good guide to the future, if we can't rely on this rule we are in a new world and it's hard to believe this world is really in such a bad condition as all that.

Buying the market is fine as long as one doesn't pick the firms that go under in bad times as it is really hard to recover from a wipe out of even 5-10% of your portfolio.

Some of smart investors other articles about economic moats etc are good advice for avoiding this risk and the ability to pay a real dividend and have dividend cover of 2-3 times at least is a simple to claculate ratio that should avoid this killer risk.