Market Update
By Saghir A. Aslam
Rawalpindi, Pakistan

(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)

The importance of strategic allocation

When people are scared, they have a lot of questions about what's happening, how bad it could get, and what to do with their investments. This time is unique, but it has its own set of challenges. That's why helping friends choose the right mix of stocks and bonds is so important.

Young friends can handle the ups and downs of the market by thinking long-term, knowing that stocks usually do better than bonds over time. Friends who are done working and enjoying retirement need to have a good amount of their money in bonds and other things that make money regularly. This helps soften the hit when stocks go down a lot.

Past Market Cycles

Even though there are some good things happening, there are also risks. Companies that aren't in the business of money are doing okay, and they're making money. One good thing is that selling things to other countries is helping make up for the problems with houses in the US. But overall, there are still big risks to the economy, and the part of the market dealing with money is saying that by making stocks go down a lot lately.

Even though I've seen a lot of times when the market was in trouble, I know that history doesn't repeat exactly, and anything can happen from here. One possibility is that things could get worse before they get better. Even without a big economic problem, people feeling scared and thinking things will go bad can make the market go down more than it should based on how the economy is doing. In this kind of situation, keeping things in perspective and sticking to the plan for investing can help us not to get too worried about short-term problems and not to get stuck because things are uncertain for a long time.

We all know fears bring opportunity

In times when the market is having a hard time, there are a couple of things I've learned. First, it's important to look at things the right way. It's easy to think too much about the bad stuff when that's all we hear about in the news. Right now, I see stocks as a good choice compared to bonds and cash for the next five years. Second, when the market is having a big problem, that's a chance to do something good. If it wasn't for times like these, I wouldn't have had the chance to invest in really good things at a low cost.

Even someone like Mr Buffett, who's really good at investing, has seen the amount of money he has go down more than it has in 18 years. But he wants prices to go even lower so he can buy more great businesses before they get better. He says that a time when the market is going down is like a gift from the financial gods—and the longer it keeps going down, the better off you'll be. Instead of being scared of the tough times in the market, you should see them as a chance to do something good.

Conclusion

I think it's going to keep being hard to invest for a while. But I know that a lot of smart people are using this time to buy parts of good companies at really good prices. Even though the whole market isn't doing great, the problems we're having now are making good chances for people who know what to look for and are willing to wait for things to get better. It takes patience and being able to think about the long-term instead of just what's happening right now, and that's what makes the people who do it well different from everyone else.

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)