The Observer Newspapers | Hang On. Wall Street Ahead

Sept. 19 , 2008

Hang On. Wall Street Ahead

The turmoil on Wall Street this week has been shocking. News starts to spread about impending doom facing a company that only a few days ago was widely regarded as in good shape, and the next thing you know the company for whom impending doom was forecast is on stable ground but another company you never thought about is vaporized.

The smart financial advisors stick to the investor's mantra: "No matter what the news, don't worry about the short term. Invest for the long term." That may be hard for some people to do, especially if they are near retirement age and looking forward to drawing on their hard-earned savings.

I remember reading something when the tech bubble burst in 2000 that put the rocky economy into perspective. The technology in 1900 was the automobile, and at the turn of the century there were thousands of companies making automobiles. One hundred years later, there are dozens, and of those only maybe a dozen worldwide industry leaders.

As time went on, the economy swallowed up those companies that were poorly suited to the age and rewarded companies with the right strategies, investors or just plain luck.

One of the talking heads on the radio made the same statement about the turmoil on Wall Street this week. Some of the firms who got caught up in the troubles of Wall Street in the late 1980s were swallowed up by other entities, just as is happening today.

Do you remember E.F. Hutton ("When E.F. Hutton talks, people listen") or the name Salomon Smith Barney? I'll leave it to wiser financial heads than mine to predict where this market and this economy is headed, but sometimes it's helpful to remember that we've faced hard times before and gotten through them.

Perhaps it's best just to focus on the positive and let the negative work itself out.