It’s going to be a bumpy ride

Stability possible despite fluctuations

With roiling financial markets spinning the heads of even the most savvy investors, what are the rest of us to do?

Here’s a look at what’s been happening in the economy, and what you should keep in mind as stock indexes bounce, government officials cut rates and pundits prognosticate about the future of our finances:

¢ No time for timing. Stock market investors should be in it for the long haul, about 10 to 15 years, said Barbara Roper, the director of investor protection at the Consumer Federation of America. Investors shouldn’t try to respond to every bit of market upheaval by “reshuffling” their portfolios. Then again, current market volatility presents a good time to do a financial checkup to see whether your portfolio is too risky or you have more invested than you can afford, Roper said.

¢ Diversify. Balancing investments in both domestic and international holdings, and with stocks and bonds, is the best way to “recession-proof” your portfolio, advises Ellen Rinaldi, principal and head of Vanguard’s Investment Counseling & Research group.

¢ Credit cards. Interest rates on many credit cards, and home-equity lines of credit, likely will fall in the coming weeks, thanks to the Fed’s actions, but how much depends on the issuer. Some cards have limits to how far declines can go.

¢ Home loans. The Fed’s rate-cutting often doesn’t directly affect mortgage rates. But people looking to refinance adjustable-rate mortgages generally are seeing better times – for ARMs based on one-year Treasury bills, the rate is about 5.25 percent now, compared with 7.5 percent last summer. Refinancings also can pay off, for folks with good credit and a home value that’s holding steady.

Fears of an economic recession sent the U.S. and world financial markets into a tailspin Tuesday, though a Federal Reserve interest rate cut by three-quarters of a percentage point helped to slow it. Christopher Anderson, an associate professor of business at Kansas University, illustrated the dramatic market downturn to his students using graphics at Summerfield Hall.

The front pages of British newspapers are displayed in London on Tuesday. Global stock markets extended their shakeout into a second day Tuesday, plunging amid fears that a possible U.S. recession will cause a worldwide economic slowdown. After a surprise interest rate cut by the U.S. Federal Reserve, however, Asian stock indexes rose sharply today.