Not that there is any crisis, the title of this little gem...

Not that there is any crisis, the title of this little gem belies the general applicability of the wisdom...

From today's Morningstar note:
"How to Manage Stocks in Times of Crisis"

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Alexandre Riley is a director at independent financial planning firm Bunker Riley.

In Benjamin Graham's classic book The Intelligent Investor, we are introduced to Mr Market, a metaphor for how the stockmarket fluctuates.

Mr Market appraises the value of the stockmarket daily, but he is a manic depressive. When prices are going up he continues to pay sometimes ridiculously more than the stocks' true worth and when prices are going down he can't wait to dump stock for substantially less than their objective value.

The point is that when the stockmarket fluctuates significantly, you don�t have to do business with Mr Market just because he offers to do so. Mr Market generally gets the price right but sometimes he can go a bit crazy.

Now, do you normally listen to crazy people and agree to be euphoric or depressed just because they say so? Of course not - investors have the full freedom to choose whether or not to listen to Mr Market and when to do business or not.

Therefore, at this uncertain time, an investor needs to understand that investing is partly to do with controlling your own emotions and preventing yourself from being your own worst enemy by selling low just because Mr Market says so.

With so much financial news from various sources it is extremely difficult to detach yourself when the TV screams, "The market is plunging - it's down 100 points!" But that's like a weatherman screaming that the temperature is plunging from 80 degrees to 78. You have to put the loss into perspective.

In fact, for anyone investing for years to come, falling prices is actually good news as it enables you to buy more for less and you stand to eventually make more in the end - but only if you stick to the plan and see it through to the end.

Generally speaking, the value of your portfolio should not concern you on a daily basis if you are well diversified and your time horizon is many years from now.

Forget about what you can't control and concentrate on what you can, and funnily enough, you may find yourself much more in control if you actually realise how much you are not!

Here are some of the things that you can control:

- Your brokerage costs by trading rarely, patiently and cheaply,

- Your ownership costs by refusing to buy expensive investment funds,

- Your expectations by using realism and not fantasy to forecast returns,

- Your risk by deciding how much of your total assets to allocate to the market,

- Your tax bill, by the use of efficient structures and the use of allowances and exemptions,

- And most of all, yourself.