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Market watchers’ advice: Stay calm, don't jump off 'fiscal cliff'

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Business executive Mark Weisner of Columbus learned about investing from his grandmother, whose chief advice was to sock away enough money early in life to avoid being forced to play an impossible game of catch-up in one’s golden years.

Weisner, an executive with Bartholomew County Beverage, likes the idea of investing for the long term and holding fast as the stock market rises and falls amid political and economic uncertainty.

“The idea is to not get rattled, not to jump in and out of the market too often. A pretty good rule of thumb is to try to double your money every seven years,” he said.

But that doesn’t mean the 50-year-old Weisner is in a hurry to put more cash into stocks right now. He plans to wait a bit before committing more money to Wall Street.

“I do have a (six-figure) sum of cash I am sitting on right now,” Weisner said Friday as congressional leaders met with President Barack Obama in Washington with tax increases linked to the fiscal cliff looming over most Americans.

“I haven’t made any investments in the last 60 days. I’m kind of waiting to see how the president and Congress come out on this fiscal cliff,” he said.

Weisner’s measured, long-term approach seems typical among experienced investors in Columbus.

Don Prince, an investment adviser with Hilliard Lyons here, said he would advise people to guard against dumping stocks just because of fiscal cliff jitters.

If an investor already was considering selling a particular stock in a few months, it might make sense to sell before the New Year to avoid higher capital gains tax rates in 2013. But experts don’t advise selling a stock you like just because of fears related to the U.S. possibly falling over the fiscal cliff.

“Go ahead and sell if you were going to do that anyway. But otherwise you’d be better off investing for the long term,” Prince said. “Companies continue to be profitable, and our research doesn’t assume a drastic falloff in 2013. We’ll probably muddle our way through.”

Financial adviser Warren Ward of Columbus said investors should be wary of bonds at this stage, though, because their value may dip if inflation returns and interest rates rise.

“Bonds are getting a little riskier,” Ward said.

He suggests a couple of alternatives. One is to invest in dividend-paying stocks that provide an income stream each quarter apart from share price. And it might make sense to put a small portion of one’s portfolio into some sort of commodity fund as a hedge against inflation, he said.

On the political front, Ward said he’s upset with Washington politicians who appear incapable of compromise on the fiscal cliff debate.

“My sense is that they are our employees, and we send them to Washington to do something; but all we get is posturing, pushing, shoving and name calling,” he said. “It’s like Laurel and Hardy bumping their stomachs into each other. We deserve better.”

Gail Guynn, 51, said her approach is to remain diversified with more conservative investments as she gets closer to retirement age.

“My husband and I are mostly in diversified mutual funds and a little bit of individual stocks,” she said.

Weisner said his approach is to keep investments balanced among individual stocks, bonds and mutual funds. He generally puts about one-third of his holdings in each of those niches at any given time.

“I did make some changes to my portfolio at the beginning of 2012. But at my stage of life, I want to be on the conservative side,” Weisner said. “I want to travel about 70 miles an hour, not 90 or 95 mph.”

Weisner said he recently persuaded his 21-year-old daughter to open an individual retirement account and start putting at least $2,000 a year into it.

“If she keeps that up until she’s 71 years old, she’ll have an estimated $256,000,” he said, adding that he told his daughter not to panic over the market’s daily or weekly ups and downs.

Not everyone follows such calm advice nationally, though.

In fact, a recent Associated Press stock market analysis found that ordinary Americans are selling more stocks than they’re buying at this point, even though stock prices have risen sharply since their March 2009 low point during the recession.

It’s the first time ordinary folks have sold during a sustained bull market since relevant records were first kept during World War II, the Associated Press study found.

“People don’t trust the market anymore,” says financial historian Charles Geisst of Manhattan College. He says a “crisis of confidence” similar to one after the Crash of 1929 could keep average investors away from stocks for a generation or more.

Since they started selling in April 2007, eight months before the start of the recession, individual investors have pulled at least $380 billion from U.S. stock funds, a category that includes both mutual funds and exchange-traded funds, according to estimates by the AP. That is the equivalent of all the money they put into the market in the previous five years.

The Associated Press contributed to this story.

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