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October 9, 2011

Do you know what a “bear” market is?

Jason Zweig discusses “bear” markets in his October 8th article in the Wall Street Journal .  The meaning  has changed over time, and from pundit to pundit, author to author, etc.  He believes we aassign a label to it to give the feeling that the market is predictable and controllable.  The label does not tells what the direction of the market the next day, week, month, etc. 
Those who can accumulate stocks when stock values are depressed will benefit.  They most likely will see gains in the long-tern.  That assumes you do not panic and sell before stocks go back up.  It is bad for those who are retired and are trying to fund your living expenses from stocks.
It is important to understand what your current and future financial needs are.  Periodically you need to review where you are financially in relation to your needs.  Based on other factors including your anticipated longevity you may have to modify your goals, savings, spending, etc.  By monitoring where you are in relation to your plan you should not need to panic.  These are also factors that determine how your portfolio should constructed.    
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