We talk about psychology a lot with clients. Studies show that the pain of loss is felt more than twice as much as the joy of gains. So it is important to not be shaken out of the market by fear when things are going down. Typically, if you sold into or after a market decline you probably lost money. Doing something as simple as increasing your 401(k) deduction will allow you to take advantage of this sale on stocks, and the money disappears from your paycheck, which makes it easier to invest in a down market. It also means that you're thinking long-term, which is good.
Right not we like healthcare companies like Baxter (BAX) and Pfizer (PFE), which pay dividends, and Gilead (GILD), which has a great HIV franchise. A defensive stock we like that is in the industrial space is Lockheed Martin (LMT), since defense spending will be robust.
Last updated February 06 2008: 10:16 AM ET
