From the June 2008 issue of Boomer Market Advisor • Subscribe!

Let's all take a deep breath

Things are not nearly as bad as the hype, and May saw a number of indicators that point to recovery. More and more analysts believe we've side-stepped recession. Famed hedge fund manager Cyril Moulle-Berteaux said April was the bottom of the housing crash. Employment beat expectations and productivity unexpectedly rose (two figures that often contradict one another). Treasury Secretary Henry Paulson said the worst of the credit crunch is behind us, as does Council of Economic Advisers Chairman Edward Lazear (Ok, we'll take these last two with heavy grains of salt). Of course, questions about the health and viability of company balance sheets remain and oil prices don't help (except to commodities managers and their investors), but all-in-all, positive signs are emerging. You'd do well to convey this to your clients.

Why?

Financial Times reports net outflows at 24 of the top 25 top fund companies and the start of 2008 was the worst for the fund industry in a decade. The negative aspects of behavioral economics are once again rearing their ugly heads. Boomers can't afford to add to the damaging effects of a down-market by letting their emotions get the best of them, especially those heading for retirement. At a time like this, a quick refresher on the dangers of emotional investing and performance chasing are exactly what's needed. Whatever they might say now, your clients will thank you for it later.

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