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Market Monday: Carol K. Lampe

Monday, October 01, 2001

Today's Guest: Carol K. Lampe, Lampe Asset Management, North Hills, www.lampefinancial.com.

Carol K. Lampe

How long do you expect the market to remain so volatile? The market will continue to be volatile as long as there is uncertainty and fear.

Are there any 'must-buy' companies or industries out there? Complete diversification among all the asset classes is so important. Government bonds and consumer staples do well during times like these, but we don't know when the bottom will be reached, nor when the market will turn around. Therefore, it is better to have a position in the major asset classes before the fact rather than after. The only "must do" right now is to continue to save and invest according to your individual tolerance for risk.

What companies or industries should be avoided? Thought to avoid: Saving/investing is ridiculous in a down market because you continue to lose. Thoughts to keep in mind: In a down market, savings will buy more shares because the prices are lower; reinvestment of dividends and capital gains will buy more shares at lower prices. The accumulation of shares, even though the prices are lower, is growth of an investment. Someday that price will be higher and those shares will be worth more.

What is your current portfolio recommendation (cash, stocks and stock sectors, bonds) for investors with a five-year horizon? A 10-year horizon? If the goal is for short-term use of the money, stay out of the market and invest in cash equivalents. A longer time-horizon of five or 10 years should contain enough equities to meet your individual tolerance for volatility.

History tells us that from 1926 through 2000, there were 56 20-year holding periods with no losses in government and corporate bonds, or in large and small company stocks.

If you are planning to retire soon and think you don't have 20 years, remember that you will most likely not be using your entire nest egg in one year and that what you don't use will be invested and growing in shares or in price for the remainder of your lives.

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