Turbulent Markets Guidelines

American Funds Investor (Fall 2010)features an article entitled "How a simple but overlooked tool can help guide you through turbulent markets".

Using the story of the January 15, 2009 landing of a US Airways flight in the Hudson River as a starting point, the reactions of Captain Chesley Sullenberger and First Office Jeff Skiles based on using checklists of procedures is the learning point.
Apply the principle to market decisions:
1. Take emotional temperature - Emotions such as aversion to loss can cause one to rush into unwise but instant action. Just be aware of how intense emotion can lead to wrong decisions.
2. Turn down the volume - Constant news and stock quotations just complicate the emotional reaction. Use regular schedules evaluations instead of sudden flurries of action.
3. Find the broader context - Use a historical context to gain judgment on how likely a feared collapse or opportunity is likely to occur. Just get perspective.
4. Recognize the potential harm of sudden movements - Obviously.
5. Think like a contrarian - In fluid times consider the value of steadiness.
6. Check in with your financial adviser - Use expert counsel to provide perspective and manage the crisis.

This checklist can apply to much more than financial management.