What to do in a down market? There is an old investment saying out there, "a rising tide lifts all boats". And here is a Bermudian comment, 'When the tide goes out, all boats (the good, the bad, and the indifferent) sit in the muck" ¿ but it doesn't mean they stay there ¿ only temporarily in most cases, until the next high tide.

We have seen this volatility and lack of confidence in capital markets before, and we will see it again. It is not the end of the investing world ¿ even if Jim Cramer of "Mad Money" kept his passion, but lost his temper on CNBC this week.

The sub-prime mortgage market issues are weighing on some portfolio management minds, and many more financial media spokespersons. Even if you don't want to think about this issue, the financial news stations are relentless in their negativity. The problem is that the more they talk about it, the more the issues become emotional, and the less able the average investor is able to filter out the noise to find any real objectivity. At times like these, it is very wise to turn off the media noise on TV if you can, then think about taking a rational approach to the investment exposure that you may have.

That means reviewing the fundamentals behind your investments: Why did you invest? What are your goals for this money? Did you choose a relatively balanced risk approach that would tend to minimise losses in down markets? Did you do your homework (or did your financial sales person) on the stability of your investment choices? Have you seen this market volatility before? Where did the market end up, three months, six months, one year later? How did your investment perform in the last bear market? How healthy are the major global economies?

We will base this comments on the composite purchase of some mutual funds, rather than pure individual stock positions. If you are savvy enough to buy a portfolio of individual stocks, research them, monitor them, and hedge them, you probably don't need to bother with my common sense comments.

1. Why did you invest? Answer, because you wanted to gain long-term appreciation in securities that will out perform inflation and average fixed deposit returns over the same time frame. Nothing wrong with that approach, but note that the key word is long-term.

2. Did you choose a relatively balanced risk approach? You filled out an investment tolerance profile and chose a risk style that fits your personality - low volatility, with consistent stable performance over all market cycles. Is this what you got? In this market, you will surely find out.

3. Did you do your homework examining the performance of your fund choices over the past 5-10-15 years against their benchmarks and compared to the same type funds in their peer groups. For example: please tell me that this is what you then chose in your mutual funds, and that you only placed a tiny amount in aggressive funds, i.e. returning 35%. If you make 35% on the upside, be prepared to give back 50% on the negative down side - the reward may not be worth the emotional sacrifice, short-term.

4. How did your investments perform in the last bear market? There is a little secret here, which is always very telling. In market crises when all investments tend to fall together, well-managed funds tend to fall less or even hold their own. They also revert more quickly to performance on the upside - you need to look for this type of pattern in your fund fact sheet documentation. Bad years to compare to are: 1987, 1991, 1994, 1998, 2001, all of which experienced volatile cycles, market crashes, investor fears, and ultimately recovery.

Markets run in business cycles and so do investments in stocks of global corporations. Sometimes, down, often up, but mostly trending upward over the long-term appreciation. If your investments are composed of a group of mutual funds, for instance, that are modelled after the S&P 500 index, it is a comforting reminder that even with market volatility and the horrendous events of 9/11, the S&P 500 index still tracked an average 10 percent per year return through last year for ten years.

5. Where did your funds end up, three months, six months, one year later after the last market crisis of 2000-2002? Based upon the assessment of your fund information sheets, did they recover faster, slower, or have they still not recovered? Believe it or not, there are still lagging investments out there; most however, have been folded into another fund or quietly closed down.

6. How are global companies and economies doing? American International (AIG) reported their quarterly results this week. Why they have had a good second quarter, profits are up ¿ the future looks promising. Overall, global corporation performance in major economies is still considered strong. You are still buying all your favourites consumer items and contributing to global company profits, aren't you?

Consider the original goals for which you invested and then apply your own common sense to the equation. If this is a retirement fund, you won't be cashing out for many years. If everything you've looked at looks solid, you may not even want to change your allocations. It is interesting to note that we don't ever hear much noise from managers of large pension funds and university endowments - they are purely focused on the long-term and have confidence that long-term appreciation will prevail.

Get cracking on this review - you may be pleasantly surprised to find that your funds have weathered these storms before and you just never noticed. We all make the mistake of thinking that the only way a market can go is up, up, up!

And one more thing.

Investing is a zero sum game. For as many investors who watch value disappear, panic and sell - there are opportunists who are will continue to capitalise on the mistakes of the losers. Many investor savvy professionals are looking for opportunities to profit, especially from people like you. Don't give them that opportunity, if it is needless.

After reviewing your investments if you still feel apprehensive, then I encourage you to read Ben Stein's very fine article "How Speculators Exploit Market Fears", August 2, 2007, at http://finance.yahoo.com/expert/article/yourlife/41148

Martha Harris Myron CPA CFP® is a Sr. Relationship Manager at Argus Financial Limited. She specializes in investment advisory services with objective comprehensive financial solutions for private clients planning for retirement and lifestyle transitions. DirectLine: 294 5709 Confidential email can be directed to marthamyron@northrock.bm

The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific individual investment advice, nor as a recommendation to buy/ sell any investment product. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.