Fear is not a fun feeling to experience, but rational thinking can control those feelings. It is also a given that what we do not understand, we fear. Lately, the person on the street here in our tiny Island has been feeling uncertain and somewhat fearful even though in some cases, they have no direct exposure to investments.

This uncertainty is prevalent even though the global capital market mess is slowly, with stops and starts, ups and downs, moving toward stability and equilibrium.

What is Stock Market Volatility? One indicator of ups and downs is called the volatility index (VIX). Otherwise known as the fear index, the VIX, the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, shows the market's expectation of 30-day volatility. Widely used as a measure of market risk, the VIX tracks the speed of stocks' price movements in the S&P 100; the VXN tracks it in NASDAQ 100 stocks.

Both indices, using a complex formula, are calculated every 60 seconds over the CBOE's trading day, which means it records a great deal of fluctuation.

Historical data has shown that wild market movements precede a change in the market's direction. A high VIX appears just before a market rally, and a low VIX usually signals a downward slide. Seasoned traders and many analysts believe that increased volatility can indicate a rebound.

One of the worst indicators of volatility that sometimes appears to be a deliberate cultivation of uncertainty, in my opinion, is the effect of 24/7 financial news media on the individual.

You cannot escape it; it is everywhere, from the big screens at a gym to cell phone efeeds. Nor does it matter if the 'facts' aren't quite right. What does matter is that with every personal investor focus, these networks record visual success as viewer participation has been extraordinarily high.

So what is the individual investor supposed to do?

Try to not to succumb to some of the ideas, comments, mistakes and moves being floated about these days, such as those below.

— Everyone becomes an expert in times like these. I never had any idea that anyone knew me, but lately, I have been approached on the street out of the blue, with serious questions. "What's going to happen to my money?" is the demand. Totally taken aback, "Sir or madam, I have to say that I do not even know your situation". Furthermore, the best advice is that you need to talk to your financial sales representative, in depth. To me, this does indicate a serious level of anxiety for the person on the street, but of even more concern is that they do not know whom to go to for allaying these fears.

— In the reported news, some individuals are so confused about what to do that they opted to converting everything to cash and putting the bills in a safe-deposit box. This method won't even keep up with the rate of inflation in Bermuda while providing sure fodder for cockroaches on the march.

— Anecdotal comments. One friend to another. "You are never going to recover that loss in your pension fund." Yet, the friend has eight years before she can even think about moving any of the pension money out — another full business cycle of recovery.

— How many times does it have to be quoted that if it sounds too good to be true, it is. According to UK media, a UK couple put 1.2 million pounds into an Icelandic bank account — on the advice of their financial advisor — all to get a couple of percentage points more in return. Sounds like to these financial sales people diversification was a foreign language. What were they thinking?

— In financial crises, it is natural to tend to blame everyone else, with politicians more likely to try to win consensus points by emphasising corporate greed and selfishness. But, what about our own responsibility? When given a choice between an investment that pays 4 percent and one that pays 8 percent, which do we pick without much thought (or questioning) about what the current market rate of return truly is or the 'real' safety? Do we really think carefully about our own situation in context with the investments?

So, let us personally consider documented reasons to think more rationally (and practically) about our own situations instead of relying on emotions with which to base long-term investment decisions.

It has happened in every market crisis. There is a lag between market depreciation and business cycle recovery. Just it seems as the tide turns, the individual saver, investor and person in the street is in an advanced state of depression. There is a physical reason for this mental state of affairs as well. Stock markets start on their recovery cycle typically months or even years ahead of consumer sentiment.

Recovery times after every crash are well documented — just to name a few: In 1987, the market plunged 22.6 percent and 500 billion dollars in a single day — trading was restricted, liquidity pumped into system and the Dow recovered in a year.

Do you remember where you were? I do.

There was an economic downturn; it was not easy, but the markets, people and the economy recovered.

2000 — The dotcom bust took the S&P two years to hit bottom and start a recovery. It took the NASDAQ after losing 9 percent — three years to fully recover — but it did and we have had five to six years of market highs.

For those fearing the absolute worst, let me ask this question.

What are you spending your money on these days?

If the answer is absolutely nothing, you have lost faith and pounds of body weight — cause you can't be eating either. If your answers are: food, gas, electricity, a car, a bike, a new set of luggage, the Internet, clothes, shoes, cell phones, trips, books, lawnmowers, plants, building items, real estate, furniture, computers, iPods, cameras, lamps, linens, personal care items, then you are every single day of your life continuing to support the operations and profits of thousands of publicly traded corporations.

Their stock and their debt is what makes up index components that we have all invested in, at one time or another. If the end of the investment world is here, then it follows that every single one of these companies would be out of business.

Are they? You know they are not, far from it! Never more true than today are the words of the Oracle of Omaha: When everyone is fearful, I am greedy. Right now, Mr. Buffet is buying American companies and equity holdings. Hang on to your good investments — it is not the end of the world.

Martha Harris Myron CPA -NH1929, CFP® -67184 (US licenses) TEP — Society of Trust and Estate Practitioners. She is a Senior Wealth Manager at Argus Financial Limited, specializing in comprehensive financial solutions and investment advisory services for individual private clients and their families, business owners, endowments and trusts. DirectLine: 294 5709 Confidential email can be directed to mmyron@argusfinancial.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.