Here's some basic advice for investors worried about the turmoil on Wall Street: Don't hit the panic button.
Instead, call up your financial adviser, who more than likely will tell you that you can ride out the trouble without major changes to your portfolio.
"For the most part, if they're already invested correctly, they should stick with it," said Jeff Burrow, a financial planner and co-founder of Valley Wealth Inc. of Modesto.
He and other experts in the area said the turmoil, while not something they welcome, is just another bump for a financial system that has long-term strength.
They said bear markets give way to the bulls, as happened after the plunges of 1929, 1987 and 2001. And they said many companies are well-removed from the current problems -- fueled mainly by bad mortgages -- and remain sound investments.
Here's what they had to say Wednesday:
Terry Swehla, Waypoint Financial Advisors, Modesto:
The turmoil is unusual in that it affects several financial sectors, including stocks, bonds and banks, Swehla said. This makes it more of a challenge to protect portfolios by diversifying holdings.
"There's almost no place to hide at this point," Swehla said.
Nonetheless, he urges clients to avoid major changes in reaction to the troubles, because financial markets do recover.
Over the past 40 years, he said, bear markets have brought an average drop of 36 percent and lasted an average of 16 months, as measured by Standard & Poor's. The current downturn has cut stock prices 24 percent over 11 months, on track with that average.
Swehla added a caveat familiar to financial planners: Past performance is not a guarantee of future returns.
But he did say investors should keep things in perspective: The rate of job losses and bank failures is far less than during the Depression, and the federal government today is far quicker to react to problems.
Gene Carrillo, Ameriprise Financial, Modesto:
Carrillo said the media has overstated the severity of the turmoil and investors should not make major changes in response to it.
He also said the portfolios he manages are not heavily invested in real estate, one of the big drags on the economy.
"My job is to make sure my clients' portfolios don't drop as much as the market does," he said.
Carrillo also advises clients to remember history: The stock market had a serious drop in October 1987 but posted a gain for the year overall.
"I work really hard at educating them and showing them statistics and charts and graphs," he said.
John Knight, professor of finance and real estate, University of the Pacific, Stockton:
Knight said Wall Street's troubles are the most serious he has seen in his career: Lenders hesitate to provide money to stricken financial outfits because no one knows just what they are worth.
But Knight said this is only part of the economy, and things are healthier for companies that provide basic goods and services.
"The main thing is not to panic," he said. "At the current time, the real economy is fundamentally sound. People still have jobs, and people have money, and life goes on."
Knight said investors should fine-tune their portfolios to maintain their desired balance of risk and return, but not make big moves in response to market swings.
"I think that the best approach is to have a long-term investment strategy that does not try to time the market," he said.
Jeff Burrow, Valley Wealth Inc., Modesto:
Investors should stick with their long-range plans, diversifying their portfolios and investing more and more conservatively as they near retirement, Burrow said.
"I think the most important thing for anybody is to know what you own," he said.
As part of diversification, people who have multiple mutual funds should make sure they do not invest in the same securities, he said.
Burrow said the federal rescue plan for ailing financial outfits likely will help restore confidence in the system. And he said his clients are not overreacting.
"You get your usual phone calls," he said. "I wouldn't say anyone is panicking."
David Mraz, Mraz, Amerine & Associates, Modesto:
He urges clients to invest in "strong, financially flexible companies" that can weather the kind of credit crunch afflicting Wall Street. They include makers of "consumer staples," from razor blades to soft drinks.
"They're not really high- profile -- just solid organizations that tend to operate conservatively," he said.
Mraz said many of his clients have perspective about today's challenge because of their long experience with investments.
"We will get through it," he said. "It's not the first time we have had a financial seize-up like this. It won't be the last."
Bee staff writer John Holland can be reached at email@example.com or 578-2385.