Making Sense Of Market Shifts Can Alleviate Fears

BERLIN – Most investors with a long-term strategy expect periodic market corrections. In fact, this volatility often leads to new opportunities.

The recent and dramatic shifts in the Dow — such as the 340-point drop on Feb. 5 — reflect investors’ deepening concern about the markets.

Volatility and tight credit conditions are expected to continue, and the possibility of a recession at home is real. Significant volatility has reached beyond the U.S. to world markets, and both Washington and the Federal Reserve have taken extraordinary measures to stimulate the U.S. economy.

With all this activity, it’s natural to be concerned about how market swings may affect you.

The markets have experienced strong gains and losses before. It’s important to recognize these ups and downs as inevitable and not to abandon sound strategies for fear of temporary setbacks.

For those investors who stand by their long-term plans, opportunity awaits.

“People tend to think of volatility as a negative, and it can be unsettling,” said Richard Bernstein, Merrill Lynch Chief Investment Strategist. “But we think there are positives to pursue, because volatility always leads to a change in market leadership, and that can offer opportunities for investors.”

To hear more of what Richard Bernstein and other top Wall Street strategists have to say about volatility and potential new market leaders, visit the Merrill Lynch Outlook 2008 at

Then talk with your financial advisor to help bring the recent market activity into perspective. This is the time for clear thinking — and a time to keep on track toward the life you want to achieve. With this in mind, a re-evaluation of your asset allocation and risk profile is always a valuable exercise.

(The writer is a Merrill Lynch Senior Financial Advisor. She can be reached at 410-213-9084.)