Should You Worry About Terrorism Before You Invest?

You may recall that after the attacks of 9/11, the stock market closed for several days. It reopened on 9/17 with the Dow down 7%. 

That was it for a few I know, Mary and Frank. The attack on the country, coupled with the attack on their personal finances, was too much. They were afraid that terrorism would our economy and stock market sinking like the Titanic, so they sold all their investments market.

Was it the right move? 

Nope. In less than two months, the situation has changed dramatically: Within 53 days, the market recovered all they had lost. And by the end of the year, the market was 12% higher than it had been when Mary and Frank had saved. Now their biggest problem was the lack of a strategy to get back in. In their uncertainty and confusion, they were paralyzed by the fear of making the wrong move again.

You are well aware that in September 2001 was not the first time the U.S. weathered catastrophe directly affected investors. Among other events, we have experienced depression, World War II, the Cuban Missile Crisis and a murdered president.

Yet the stock market continue to thrive.'s 

Despite market resilience, many people lost a lot of money. It might be tempting to think that as possible about what happened geopolitics had been investors better she would have led off personal financial devastation. But that's a sucker punch. Now we fully aware of every twist and turn in the world, has given us the sense to invest based on international political and military posturing? Not if you want to make money.

Here is another example. Shell-shocked, Janice meeting with her financial advisor in March 2003. She had the market tank seen the horrific bear market from 2000 to 2002. She had sordid tales of corporate theft that cost investors billions and, in many cases, to read their retirement. She worried by accounting scandals. And of course there is the problem in Iraq.

Janice was convinced that one of these events disaster for its investments could mean. In her mind, all these things happen at the same time certain financial catastrophe. Meant Demoralized, Janice sold all its holdings. And from an emotional standpoint, you could not blame her.

But from March 2003 until the end of 2003, the Dow rose 32%. Janice missed completely. 

Our market has survived everything thrown at it. Unfortunately, we will probably always overcome a crisis. The current terrorist problem would be with us for many years, and that is certainly a human tragedy. However, no one can pull the economic cycle. There will always be companies that have great products and to. High profit Those companies will expand, and the value of these companies will grow. If you have shares in those companies, will expand your ability.

Even though the world can be a scary place history shows that disasters end up as just dots on the investment radar screen. Political and military disasters have never dealt a death blow to our financial markets. In fact, she was the longest ever need to restore a military attack nine months back in 1941 after Pearl Harbor.

People lose money in tough times when they do not have a coherent, predetermined strategy for access to and exit from the market. If you want to secure your assets grow, ignoring military and political events. Preparation of a plan for buying and selling based on what the market tells you, not the evening news. Then let that plan dictate your decisions rather than be influenced by your emotions, which will be in times of stress. Understandably strong But if you want to endure every storm you need to stay the course.

In short, listen to the market, not the media. Developing what I call a "safety net strategy," whereby the impact of world events is reduced, but those events never dictate your strategy. Such a strategy evaluates true, instead of the perceived risks in the market. In future columns, I will share some of that real risks are and how to create a safety net. Strategy that in any economic climate will give safe haven