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As I perused the latest quarterly statement from my Roth IRA account, I had to fight feelings of statement shock. Sure, I knew what was coming (who wouldn’t know, after all the Wall Street drama lately), but that didn’t really prepare me to see the numbers staring me in the face.

Investopedia defines statement shock thus:

The shock associated with opening an investment statement and seeing that the value of your portfolio has dropped more than what was expected. Statement shock is most commonly referring to an unexpected drop in value but can also be used to describe lower than expected returns.

And really, that was my experience (the first part). I had vague expectations of what I would see, but I wasn’t truly prepared. But then my normally long-term outlook asserted itself, and I began thinking about the positives. After all, now is not the time to panic.

Some people have expressed worry, threatening to liquidate retirement accounts and considering all sorts of rash actions. While it is certainly time to cut your losses on some investments, there are those that actually represent a bargain. You can buy at a low prices — getting more for your money — and then when the market recovers, you will be sitting pretty.

The trick, of course, is to make good decisions. You need to choose solid investments that are likely to recover. Another trick is to keep the long term in mind. While statement shock can be initially disconcerting, it is important to take a deep breath and remember that over time the market gains. So, if you plan to retire in more than 10 or 15 years, you are probably going to be okay.

If you plan to retire sooner, it might be a good idea to consider other options before you begin withdrawals. Cash, working past your target retirement age, a reverse mortgage and other options can get you through until the market recovers and you can take retirement plan withdrawals without decimating your principal.

Earlier today, the U.S. stock market rose as hope among the Wall Street crowd revolved around the idea that a $700 bailout package would be passed. However, there are still questions about the package, as well as scrutiny by the Democrats in Congress (and outright protest against a bailout by some Republicans) about the terms. Concerns surround the fact that the proposal seems to give Secretary of the Treasury, Henry Paulson, sweeping financial and executive powers.

Other concerns include such items as:

1. Allowing CEOs who made poor decisions to retain their large compensation.
2. No help for homeowners who are struggling in this mess.
3. The lack of regulatory oversight proposed by the Treasury Department.

The Street reports on how much Wall Street would like to see this deal, as well as some of the downsides of such legislation:

“If the deal gets passed, the stock market is going to react well because they believe that the plan can return liquidity to the markets,” said Chip Hanlon, president of Delta Global Advisors. However, he said that the plan has inflationary implications, and commodities will also increase in price as a result of the plan.

There are worries that these issues will stall passage of the legislation needed to flood the market with dollars and increase liquidity. In fact, this is a very real concern for some as political wrangling begins on Capitol Hill.

Even calls by Henry Paulson and Fed Chair Ben Bernanke for Congress to pass the legislation quickly haven’t completed quieted the stock market, and stocks are down overall today as trading heads closer to a close.

Indeed, this is probably a time for caution, rather than a time to try and ram through hasty legislation. Remember what happened the last two times Congress rushed into things and granted sweeping powers to the executive branch? We got the USA PATRIOT Act and the Iraq War. Perhaps a bit of wrangling, reflection and delay is needed at this time. We aren’t likely to slip into complete financial ruin while cooler heads attempt to prevail.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Today’s big new on the stock market (well, other than the fact that confidence is fading in the $700 billion bailout now that political wrangling is involved), is the announcement of some major stock buybacks. Stock Trading To Go reports on the thinking behind stock buybacks:

Companies with cash on hand are taking advantage of depressed stock prices in their own stocks by announcing big buy back programs. This is a strategic move that could give long term investors of these stocks something to cheer about.

The three main companies in question right now are:

1. Nike (NKE)
2. Microsoft (MSFT)
3. Hewlett-Packard (HPQ)

What are stock buybacks?

Stock buybacks are programs in which companies buy their own stock back from shareholders. They use capital to purchase the stocks (often at a discount from higher prices) so that they can sell them at a later date for more money.

Stock buybacks can benefit some long term investors, since many of them originally bought stock at a much lower price. For instance, it you bought stock when it was $15 a share, but it went as high as $80 before this bear market brough it down to $35 a share, you are still making a profit. For those worried about additional losses, it can be calming to take advantage of stock buybacks.

In related news, MSFT also upped its dividend (paid quarterly) to 13 cents from 11 cents. This is helpful to those who use dividend stocks as a regular income stream.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

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economy, investments, stock buybacks