Planning Ahead - November 5, 2008

Dealing with uncertainty in today's fluid economy

Bob CondronNovember 4, 2008 

Bob Condron, CFP, MSFS, is a registered representative of Bridge Financial Partners. He can be reached at 548-8875 or

Unless you are Rip Van Winkle just waking from a long nap, it is apparent that we are facing the most difficult economy in a generation. It is also obvious that we all need to step back and take a breath.

According to a report published by the U.S. Bureau of Labor Statistics, at the end of the first quarter of 2008, the unemployment rate in York County was 6.1 percent. That means more than 93 percent of our residents are employed. Although there were lines for gasoline a few weeks ago, the lines have disappeared and almost every station now has lower prices. The last time I went to the grocery store, there was plenty of bread, milk, vegetables and meat. It was estimated that more than 165,000 people paid to attend the recent NASCAR race held at Lowe's Motor Speedway.

When I work with clients, I ask them to set aside emotions when making financial decisions. Too often, people make a buying decision based upon fear, greed or love. Greed was apparent in our last economic debacle when people began to buy "tech stocks" for no other reason than they heard how everyone else was getting rich. The more recent housing bubble can also be partially attributed to greed when investors began to buy homes hoping to turn around and immediately sell the same property for a profit.

Fear is now the rampant emotion that is partially driving the financial situation we find ourselves in. Not all, but many news outlets including, TV, radio and print media, sensationalize bad news. Regardless of which outlet, the information always seems so convincing. Relying upon such sources, many individuals have gone to their bank and withdrawn funds supposedly to hide them at home. It was even reported by one source that the sale of safes for home security had risen dramatically in the last few months.

Should you withdraw all your money? Should you move all your investments to cash? What about government securities? The answer is, it depends upon your personal circumstances and is not the same answer for everyone.

If you have not already done so, sit down with your financial advisor. Review your goals, time horizon, comfort level with risk and financial situation. For some people, this reduction in the overall value of stocks in the economy will represent one of the best buying opportunities in some time. For others, it may mean delaying retirement or altering plans until such time as our economy recovers.

Are we currently facing adversity? Yes, we are. Is there a quick way to fix all the problems we face? No, there isn't. Just like losing weight, we did not get out of shape and overweight in a day and we will not get back in shape in a day. To start, we need to change how we handle our personal finances. We need to buy what we can afford and sacrifice current gratification by saving more money for the future.

Most important, you cannot let your emotions take control of your financial decisions. Take a deep breath, meet with your financial advisor and take practical steps to plan for tomorrow.

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