Average Americans hang tight through market swings

An outline of the United States against dollars represents U.S. finances and money.

JEREMY HOBSON: We're going to look now at how ordinary Americans have been responding to all the mayhem in the markets with their own investment portfolios. David Lazarus is the consumer columnist at the LA Times and he joins us now. Good morning.

DAVID LAZARUS: Good morning.

HOBSON: Well, David, did individual investors learn anything from the last crisis in which many of them lost a lot of money?

LAZARUS: I'd say yeah, but the evidence is still anecdotal. There really isn't a lot of evidence that the little guy sold a lot of stocks as we had this roller-coaster ride of the stock market, meaning that buy and hold, which some had been saying is completely passe, isn't so passe after all. So, I think we got a good sense that the little guy, when the market goes completely topsy-turvy, you hit the sidelines and wait it out.

HOBSON: But, how are you supposed to wait it out when you're sitting there, maybe you're two years away from retirement, and you're watching the market go down, down, down -- or up and down -- what are you supposed to do?

LAZARUS: That's the real test actually, and my advice to people is just to take some Dramamine and deal with it because you can't win that game -- we live in an age where there are super computers trading within milliseconds -- you have to sit back and let them do their thing. The market is having these wild gyrations. When the market is fed by emotion, pure and simple, you have to learn to keep your emotions under control, so rather than being Captain Kirk, you want to be Mr. Spock.

HOBSON: Well, have people pulled away from the market in a big way? Have people decided I'm just not going to play the game at all because the only people making money are these high frequency traders as you say?

LAZARUS: I think they understand that, but at the same time, with the Fed keeping interest rates at near 0, in perpetuity, I think a lot of people understand if they want to make any money, they have to have some skin in the game. Meaning their 401K, or their 529 education plan or something that's going to be exposed to stocks in one way or another, and what that means for the little guy is you've got to know your tolerance, and you've got to have a portfolio that can withstand anything the market can throw at you.

HOBSON: David, have you been keeping calm with all this with your own state of funds -- or have you been taking Dramamine and getting out of the room?

LAZARUS: Dramamine yes, and I also haven't been looking. I find I sleep better at night when I don't go online -- don't look at what my funds are doing on any given day.

HOBSON: Probably the best advice we've heard all day. LA Times consumer columnist David Lazarus, thanks so much.

LAZARUS: Thank you.

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