Buy, Sell, or Stay Put? Advice from the Pros

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What if I now realize my investment strategy is way off? Should I move my money?
If you were 100% in equities or overweight in your own company's stock, it's good to get out of denial about the risks. "This is a wake-up call for a lot of people," says Christine Fahlund, a financial adviser at T. Rowe Price Group (TROW). "People are finding out that their risk tolerance isn't what they thought it was or that they're not superstars when it comes to investing."

The big question is how quickly to act. "It's not a good time to sell anything, so it depends how bad it really is," says George Feiger, chief executive of Contango Capital Advisors in Berkeley, Calif. Investors not yet approaching retirement may be able to move portfolios toward a desired asset allocation slowly and wait for the market to settle down.

Will I still be able to retire?
The real reason to worry isn't market movements, no matter how nerve-wracking; it's whether you're saving enough. If you're in your 20s, 30s, or 40s, you've got lots of time on your side. "With a longer time horizon, say 10 to 20 years, even the crash of 1987 looks like a blip," says Michael Mauboussin, Legg Mason's (LM) chief investment strategist.

For some people on the verge of retirement, there's a tougher reality that may mean working longer. Psychologically, being able to blame the market turmoil is helping investors cut through their denial about how long they're going to need to work to have a comfortable retirement. "It's the first time that people are saying publicly, 'In this market, I am not ready to retire,' " Fahlund says. "The reason is probably more than just their investments, but finally they can share these emotions with people and feel like they are in this together."

What if I'm already retired?
The big problem is the cash squeeze that can come from the double whammy of lower asset values and interest rates. With your portfolio throwing off less cash, you may be tempted to reach for yield. Or you may consider selling assets—at what are now low valuations. Do either, and you could face trouble in the long term. "It's easy to tell a guy who's 35 and panicking that this is the wrong time to sell. But the consequences are worse if you're older, and it's harder to overcome the emotion and fear," Feiger says. Be sure to run the numbers, and don't assume you'll be short because of the plunge on Sept. 15.

Is this a buying opportunity?
That depends on your risk tolerance. "We may not have final markdowns yet, but if you have the stomach, some investments are looking cheaper," Diesslin says. Even so, he'd steer clear of financials.

Stephen Wetzel, a financial planner and adjunct professor of financial planning at New York University, is far less circumspect. "I'm buying like a crazy man: value stocks, financial services, value funds, muni bonds, some international small cap. You don't get opportunities like this very often."

With Christopher Farrell and Lauren Young

Amy Feldman is an associate editor with BusinessWeek in New York.