Below are some tips about investing in a falling market:
• Don’t panic, but be prepared for things to get worse before they get better. If an investment is still sound, hold on even if it has moved lower with the market.
• Those with the stomach to buy in this market should move in half-steps. Invest half your allocation and then wait to see how it does.
• For buyers, don’t purchase something just because it’s cheap. Seek out companies that can weather the credit crunch, ones with little debt and high levels of cash on their balance sheets.
• Consider municipal and corporate bonds, which have also fallen in value and could benefit earlier than stocks once the credit freeze thaws.
• It’s hard to know which investment categories will do well at any given time. Hold a broad mix of equities and fixed income, both domestic and foreign.
