There are ways to weather a bad financial storm

Investors shocked at losses in their monthly mutual funds statements or daily losses in stock portfolios should realize they are not alone.
Pension plan investments in Canada lost enough money in the last six months of 2007 to earn only 1.5 per cent for the entire year.
The best managers in the business, on average, lost money last year.
So you can stack your own returns or your mutual fund's returns up against two benchmarks - average pension plan returns of 1.5 per cent or the 8.8 per cent gain by the Toronto Stock Exchange (TSE) index.
The TSE managed to do that well because of large resource sector gains earlier in the year and the fact Canadian banks did not plunge by year end. Incidentally, that 8.8 per cent gain disappeared in the first 14 trading days of 2008.
What happened, happened.
The big question on everybody's minds is what will happen to their investments in 2008 and beyond.
I wish I knew. I could make a fortune.
The majority of analysts in print and electronic media seem to believe markets are in for bad times until mid-year or later this year. By then, they say the asset-backed global credit crisis should have been resolved and a supposedly short mild recession in the United States should be over.
Temper that consensus with two factors. Past experience shows the analyst community can be very wrong and analysts are paid to promote the general market.
None of them wants to admit sour markets for fear of igniting a selling frenzy.
They may be right, but their predictions are usually qualified in case something big and unexpected happens.
Bear markets in Canada average 12 months. This one started in August or November, depending on your view,
The last bear market lasted 25 months in 2001-2002.
The next big bad thing could be one of many scenarios - terrorist actions, falling oil and metals prices caused by Asian economic flu, global influenza outbreak, Chinese revolution, Korean nuclear concerns.
An extended downward/mixed economy and recession may happen in the U.S. if the central bank keeps interest rates up to kill inflation. That rate has been slashed.
Signs of higher inflation ahead already exist. Interest rate cuts fuel inflation.
What should an investor do?
Get some hand-holding advice from your financial counsellor. Don't panic.
If you're a short-term momentum investor, be prepared for plenty of sudden swings.
If you're a long term investor, be prepared to hang in there for better times.
A credit crunch, inflation or global recession are not the end of the world. The North American and global economies are still strong.
The established, bigger well-known companies will weather the frigid blasts best.
If you have cash, buying opportunities will abound, but beware of 'catching a falling knife', that is, buying a fallen stock only to see it fall more. Wait until market conditions improve before buying in.
If you have big paper profits in a stock, consider cashing in some. You will have cash to buy bargains and will sleep better.
Stocks with safe dividends, usually established, bigger well-known companies, are a good place to be. If the dividend is three per cent you only need a four per cent price gain to match the long-term market return of seven per cent.
Avoid buying smaller companies, even if the story is compelling, These stocks fall further than the big ones in a bear market and take longer to recover. Maybe weed out the bad ones.
Remember, three forces push prices up or down.
Force one is earnings and revenue underlying the value of companies.
Force two is the professional traders with more information than we small investors will ever have. They can sense a decline like a snake can sense prey. Many of them got out in the August decline. Their trades also put the brake on massive declines
Force three is greedy buyers, or fearful ones, who are really gambling and don't know enough to get out until they see a dramatic decline. Their gambling drives up values excessively.
The latter group includes most investors at one time or another.

Bizword columns do not solicit buying or trading of securities. Investors need to do their own homework or consult advisers.

Ron Walter can be reached at 691-1264.