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COMMENTARY: DON'T LET MR. MARKET PUSH YOU AROUNDZap the TV. Unplug the modem. Stuff your ears with cotton, and turn a blind eye to the financial tips in your daily paper. When your broker phones, tell him you'll call back. Amid a shaky stock market, this is about the last moment you should pay attention to investment advice. Except this: Think of the stock market as a tool for managing your money--no more and no less--and remember that you'll enjoy much better results if you use it instead of letting it use you. Easy enough to state, that philosophy is difficult to maintain. ''The worst thing that market volatility does to people is give day-to-day focus to what should be a long-term endeavor,'' says James P. O'Shaughnessy, chairman of O'Shaughnessy Capital Management Inc. in Greenwich, Conn., and author of What Works on Wall Street. Test yourself. Has the buzz from the market's drop since July 17 prompted you to dump shares you hadn't planned on selling? Has it kept you from buying stock in companies whose future you see as bright? Ask yourself, who's really in charge here? You? Or the market? If you suspect Mr. Market is getting the best of you, relax. Regroup. And you may find you don't need to lift a finger. When you're in charge of your portfolio, you'll need to use this tool, the stock market, in just two sets of conditions. If you suddenly discover a stock that you feel is undervalued or you find yourself with money--an inheritance, say--that needs to go to work, congratulations! You're a buyer. Then there are circumstances that boost your cash needs--a daughter's college tuition, a great bargain on a beach house. Or perhaps the outlook for a stock you own has deteriorated. Now, you're a seller. BUY AWAY. Either way, you have some options. Sellers would do better to liquidate other, stronger assets such as bonds or, perhaps, European stocks. The cash might even flow from savings or money-market accounts. The point is to find the asset class where demand for what you own runs strongest. And, if possible, wait to sell when buyers converge on companies you had aimed to unload. Such stocks as Gillette Co. (G), popular and pricey despite the sell-off, would be good candidates. Remember: You want to be on the lonelier side of any trade. And if you're a buyer? You're in a better spot when the market sags. ''Why in the world would you get upset when the stock market goes down when it gives you a chance to buy at lower prices?'' asks Peggy M. Ruhlin, a partner in Budros & Ruhlin Inc. in Columbus, Ohio, which manages $400 million. If you had a shopping list of stocks pre-correction, lower prices should only encourage you to buy more. Robert Mohn, manager of the $280 million Acorn USA stock fund, says he did just that as the Dow dropped on Aug. 4, building bigger stakes in favorites such as security-services company Wackenhut Corp. (WAK) So where to put your money to work, if that's your plan? O'Shaughnessy observes that long-lagging small-company stocks are down nearly 9% this year, while the Dow is still up 8%, despite the recent dive. ''Five years from now, we're going to be asking ourselves, 'Why were we paying 50 times earnings for Coca-Cola (KO)when its prospects were so limited?''' he says. He deems small caps the single best place for long-term investors to put their money now. And if you don't need to buy or sell? Don't let Mr. Market tell you what to do. The market, Ruhlin says, shouldn't be knelt to ''as a god that has some mastery over our lives.'' It's a tool, and like any other it exists for our use. Think of it: Who would let a buzzing chain saw dictate which tree to cut down?
By Robert Barker RELATED ITEMS
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Updated Aug. 6, 1998 by bwwebmaster
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