Fix your finances now! After three of the worst years for investors, we offer guidance from top financial advisors - Investment Roundtable

Black Enterprise, April, 2003

B.E.: Is there anything else about the current economy that investors should consider right now?

CREUZOT: I think we've seen a lot of do-it-yourselfers saying, "This is really hard, and I need some help with investing." Because they're coming to us, one of the keys is managing client expectations. If you educate people on the front end so they understand that even though we have gone through this eight-year bull cycle, [and that] there are going to be difficult times ahead, then they can clearly understand what to expect from various investments.

We give clients a risk-tolerance questionnaire, which helps us get a feel for what they expect in terms of return, what their time horizons are for the money they are investing, if they have a need for income, and what they can tolerate. There are a lot of people who thought they

were aggressive but found that their stomachs really couldn't take this turbulent market. [The questionnaire] also gave us an opportunity to go back and reassess their situation. Maybe they are not as risk tolerant as they thought.

WILLIAMS: I think this turbulent time period is allowing investors to look at their situations again and not be so interested in trying to get the huge, unrealistic rates of return. This time period may have been needed in order to adjust the investor's way of thinking.

The underlying economic indicators are sound, and growth will be here soon. It's the uncertainty of what is getting ready to happen that is creating problems. Last year we were dealing with Enron; now we are wondering what is going to happen with a war.

BRYANT: I also think it's important to acknowledge that an economy in recovery doesn't always translate into higher stock prices. It's dangerous to look at numbers only; we saw positive data right after the depression-recession of the 1970s, but things traded flatly and sideways for many years.

This time last year we started out with a big bang, only to be disappointed 11 months later. Earlier this year we started up 6% or 7%, only to give it all back by late January.

B.E.: The war, corporate scandals, and the idea of trusting the market itself seem to have investors stymied. Why should they trust this market?

CLARK: One of the best things to come out of the scandals was the infamous certification, back in August, when CEOs and CFOs had to sign off and be accountable for their books. That hasn't been talked about enough. While a certification obviously doesn't fix everything, I think the trust factor is building. The idea that most companies are now saying we've certified our books and we're being held accountable, I think, makes everyone--from the top brass down--more cautious about what they are saying and how they are reporting. That's going to help the market overall.

BRYANT: Investing for the long-term doesn't mean you have to have 100% stock participation at all times. You've got other choices like corporate bonds, preferred securities, real estate investment trusts, and I-bonds. People need to understand that what's more important than what stocks you are in or what funds you have is making sure you are investing every month and spreading things around in the proper asset allocation.