The Troubled Mind of Mr. Market

Angst. Confusion. Frustration. Elation. Maybe the best place to ride out the market is the analyst's couch

by Ben Steverman

From the case files of Dr. Graham, a specialist in treatment of investors with post-bubble anxiety disorder, or P-BAD:

Doctor, thank you for squeezing me in today. I've just been so stressed lately.

Make yourself comfortable, Mr. Market, and tell me what's been bothering you.

It's my investments! My portfolio's down 20% in three months. Meanwhile, my house is now worth less than my mortgage. The house down the block just sold for $30,000 less than its asking price.

Then there's the news. Every time I turn around, another bank or hedge fund or brokerage is reporting billions of dollars in losses. Rogue traders. Bond insurers in trouble. Analysts cutting profit estimates. And some economist is on TV saying we're already in a recession and this is the worst housing market since the Great Depression. Everything gets hyped until it feels like the end of the world.

Also, I had a crazy nightmare last night…

Tell me about it.

It was about Bernanke.

The Federal Reserve chairman? What happened?

Well, he was getting mauled by a giant bear while a chorus of fund managers was chanting, "Behind the curve! Behind the curve!"

I see. How does all this make you feel?

Not good, Doc. While the Fed, the Congress, and the President scramble around trying to stimulate the economy, I just lay on this couch, feeling helpless.

Have you talked to your financial adviser?

Don't even get me started on that guy. For the first two weeks of the year, I don't hear from him. I'm like, where is he? Then he calls me last week, and it just panicked me even more. Had things gotten so bad that he needed to call all of a sudden? And why did he sound so calm when the Dow started the day down 450 points?

It sounds like you have some conflicted feelings there. What did he say?

What he always says: "Let's stick to the plan we made. We're investing for the long term, so these short-term movements shouldn't rattle us." It's clear the guy has no idea where the stock market is headed. What am I paying this guy for anyway?

You expect your adviser to predict the future?

Well, no. Maybe I'm being a little unreasonable. I just wish I could do something. It's maddening that he remains so calm. He keeps saying, "Emotions and investing don't mix. If we panic, we'll just do something stupid." He says this is a temporary decline that will only become permanent if I panic and sell. Sometimes I feel like I'm a passenger on the Titanic and he's the captain, telling me to remain calm.

Didn't he warn you the stock market could get crazy?

Sure.