Don't Let Volatility Get To You
by Charles B. Carlson, CFA
Dow Theory Forecasts

Stocks continue to flop around, driven, in part, by the latest war news.

To be sure, what happens in the Middle East will have day-to-day implications for the stock market. But investors should not lose perspective. That war images are now broadcast into our homes on an minute by minute basis does two things - first, it suffocates us with constant coverage to the point that it seems this war has been going on for months, not hours. Second, it elevates every bit of war news to major significance.

The best way to approach the market right now is to expect the unexpected when it comes to Iraq, to expect momentary sell-offs on "breaking news." Indeed, my feeling is that any major sell-offs as a result of what happens in Iraq represent an opportunity to buy stock for what I believe will be higher prices over the next several months.

Bottom line: Don't get caught reacting to news. Set a course with your portfolio that looks beyond today's headlines and take advantage of the unexpected events as they unfold to add to favored positions.

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