“Five things investors can do in a market gone crazy,” by Jeff Cox, CNBC.
While the volatility makes for many gut-churning moments, getting out of the market now would be a mistake, says Gary Flam, portfolio manager at Bel Air Investment Advisors in Los Angeles.
True investors, he says, actually should be thinking about how they`ll be positioned once Greece gets past the turmoil of its debt and political issues, which most recently have come through the waffling of President George Papandreou about whether the nation will accept bailout conditions.
“You have to be an investor and not a trader,” Flam says. “When I say `investor,` you have to be looking to invest in good companies you think can do well over the next several years and aren`t depending on the next Greek vote.”
Valuation is often trumpeted as a reason to buy stocks in the current environment, with the S and P 500 trading at a 14.5 price-to-earnings ratio. For Flam, the current era is reminiscent of the 1977 to 1982 market run that saw three bear market sell-offs and one near-bear – but which was followed by a massive bull move.
“On every sell-off they should be building up their equity exposure, because at some point over the next couple of years that next secular bull market is going to begin,” he says. “No bell is going to go off to signal it, but you want to be exposed to equities by then.”
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