Long-term goals key

NEW YORK – For some uneasy investors, the questioning could start at the mailbox: Now what?

Statements for investments like 401(k) plans or mutual funds will soon arrive, showing investors how much they shared in the bloodletting Wall Street saw during the first three months of the year.

With evidence of the quarter’s toll in hand, more investors might be tempted to call brokers or financial advisers, asking what to do now. For many with a long-term investment strategy, the answer might simply be stay put or at least consider only a few modest moves to snap up bargains.

Investors might find some solace in knowing the carnage was widespread. The Standard & Poor’s 500 index – the yardstick for many stock investments – fell nearly 10 percent in the first quarter. And all but a handful of relatively small mutual fund categories lost ground.

So for investors who didn’t wade into volatile corners of the market like gold or into funds that bet stocks would fall – so-called short-bias investments – it was a fairly dismal period.

For many, the quarter’s gyrations were a reminder of the fragility of some investments. Investor Paul McCullough has remained distrustful of the stock market since being badly burned by the dot-com collapse.

Instead of stocks, he puts his money into holdings like CDs and savings accounts. “I took a tremendous loss,” he said, noting his portfolio fell about 40 percent at the market’s swoon at the start of the decade.

But while avoiding a pullback in the markets might be ideal, it’s hard to accomplish. And investors who simply step aside can end up in the financial dust if the stock market comes roaring back. Wall Street’s biggest gains often occur in short bursts when the stock market is climbing out of a downturn.

“You don’t want to miss it when things turn around and things start to look a little better,” said Russell Croft, portfolio manager at Croft Leominster Investment Management in Baltimore.

“We try to preach the long-term focus of how we do things. There are always, always going to be times of volatility in the stock market. It kind of pays to be an optimist and stick with it through the bad times. The trend, as we know, is to go up,” he said of the stock market.

Investors might consider taking advantage of the pullback by steering some of their holdings into quality stocks that have been beaten down, according to Dean Junkans, chief investment officer at Wells Fargo Private Bank in Minneapolis.

With interest rate reductions cutting into bond yields, for example, Junkans said investors should think about buying stocks of solid, dividend-paying industrial or technology companies in order to keep ahead of inflation. He said cautious investors might consider municipal bonds, which were hard hit in the first quarter.

“This is a chance to make tweaks and be opportunistic in your portfolio. Take some tax losses if you need to do some repositioning,” he said, suggesting investors consider using the pullbacks in their investments to reduce their tax burdens.