To Invest or Divest?: Financial pros preach calm to protect your portfolio.

• Author: Scholl, Barry
• Position: Finance

These days, watching the stock market is much like attending a horror movie -- you spend half your time with your hands over your eyes, and the other half gripping your seat in suspense. When will the market turn around? How much lower can stocks go? Should I walk out on the action just as we're nearing the best (or worst, depending on your perspective) part?

Unfortunately, no one can definitively answer these questions. But based on historical precedent, financial professionals agree this is no time to get up out of your seat and leave the investment theater.

"It's not time to pull in your reins right now. It's time to invest," insists Salt Lake investment adviser Jeff Clime, principal of Cline & Company. "It's time to be selective and ease yourself back in. To stay in cash right now might be a mistake because as the market comes back, and it will come back, you may be chasing it,"

After 18 years in the securities business, Cline has weathered countless market fluctuations. His commonsense advice to investors is to hedge their bets. "I would diversify among the solid blue chip stocks, such as companies that pay and increase their dividends," he says. "Their stock prices are not down because of poor performance as a company, but because of the poor performance of the market. As the markets improve, their prices will come back."

But what if you're an active investor, the type who has all the financial sites bookmarked on your PC and your broker's number programmed into your speed-dialer?

"This is not a time to let emotions rule your investment decisions," Cline says. "If you are working with a professional, heed their advice. They make a living by offering sound guidance. If you are looking for a professional to help you, ask about their experience. Those of us who've been through multiple market situations may tend to have a better handle on market and investor expectations."

In uncertain financial times, as corporate profits slide and layoffs mount, many investors are tempted to abandon the higher returns promised by stocks and take refuge in T-bills. But according to a recent Newsweek article by Bob Bobala, assistant managing editor at The Motley Fool, the stock market remains the best place to invest your long-term savings. As measured by the S&P 500, stocks have returned an average annual return of 11 percent since 1926. To put it simply, in spite of the stock market's periodic tendency to buck up and down like a half-trained Wyoming...