Ken Himmler.com

As I went back onto my PC tonight I couldn’t help but notice the headlines "Dow Drops 770 – More Than After The Sept 11 Terrorist Attacks"! For those that read at first glance it would seem scary. For those that have better memories than that I have the real information for you. I have downloaded the Dow Index Table from September 4th 2001 to December 20, 2001. I want you to notice on September 5th 2001 the Dow was at 10,033. It then dropped to a low of 8235 on September 21st. While the 770 drop may have been bigger than the single day drop – who gives a rip?. What does that really have to do with the companies profitability that make up the Dow? – NOTHING. If you note on the table again on 12/19/2001 the Dow went back to 10,070. I feel really sorry for all those emotional people who jumped out at 8235 and only a few months later it was back above where it was before.

I wish I had better news about how to stay retired but the recent market scare has a lot of people making rash and emotional decisions. This usually comes from a lack of a financial plan and the lack of working with someone that has designed a (RDP) retirement distribution plan. When you are retired look at your funds as being broken into four different pie slices. Stocks, Bonds, Cash and Real Estate. Each one of these should behave differently and they should have the right amount of diversification. Usually, when someone has a scare it is because they see what is happening in the stock market. If the plan was set up correctly, they should have thier distributions coming from cash or bonds when the market drops. When the market goes up it is then time to re-balance – and replenish the cash or bond accounts. If you currently have a plan that depends on taking distributions only from stock then I do feel for you. What can you do to save your retirement portfolio?

1) Make sure that you have an adequate (RDP) retirement distribution plan.

2) Make sure that you have a plan that allows you to pay the least amount of tax possible.

3) Make sure that you have a plan to re balance the assets when they get out of tolerance to the model you use.

4) Make sure that you do not act on emotions and try to time the ups and the downs.

5) Have a process and and a system in place that calls for specific action tasks when certain things happen that may affect your stability.

6) Make sure you have your plan balanced into

Domestic Stocks Small cap, Mid Cap, Large Cap

International Stocks Emerging and developed

Real Estate, Income producing diversified between residential, commercial and industrial

Cash and cash equivalents Money Markets and Fixed Annuities (also could include equity indexed annuities)

And lastly, remember the past – there have been many other market drops and no matter how much media sensationalizes the drop remember that as long as we keep having babies we will continue to need products and services. (Historical birth rates have been directly tied to economic growth and we just had a spike as big as the baby boom in the 40s and 50s)

Tells us how you are handling the recession?