Commentary: Separating Emotions From Investing Can Be Difficult

Summary

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During the recent months, the markets have tested many investors risk tolerance as they watched their wealth move at the whims of a volatile and depreciating market. The Dow Jones Industrial Average* (DJIA), which captures the most media attention of all market indexes, dropped from a 2008 high of more than 13,000 to a low of less than 7,400.

The pathway the DJIA took during 2008 resembled an unpredictable windy road -- the value of the popular index changed by as much as 11 percent in one day and the year showed the largest average daily percent change in the index since 1933, when the DJIA was valued near 170. It is important for investors to understand that short- term market fluctuations reflect the emotion and confidence of investors while the long-term trend reflects the future strength of the economy.

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Extract

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Commentary: Separating Emotions From Investing Can Be Difficult

While investors may now be seduced to depart from their long- term strategy and move into investments that are commonly referred to as "safe" investments, such as CDs, money markets...

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