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Taking stock of Y2K and your investments (Part one of a two-part series) by Erik J. Martin Most folks are worried that computers will misinterpret "00" next year as the year "1900." The money minded, however, are more worried about the Year 2000 being mistaken for 1929. Indeed, if something's going to crash next year, investors would rather it be computers than the stock market or global economy. Believe it, Mr. Shareholder and Mrs. Investor: Y2K has the potential to mess with world markets by causing investor uncertainty. The risk is causing more Americans to sit up and take notice, especially considering that more than one-third of U.S. households now owns shares of mutual funds, which have assets over $5 trillion. Additionally, nearly 84 million Americans participate in pension plans, which invest almost $1.8 trillion in equities. The bottom line is that no one -- not even Federal Reserve Chairman financial Buddha Alan Greenspan -- knows for sure what's going to happen to the world economy and the stock market between now and next year. But with the Dow Jones breaking new gain records over the last few years, a market correction has been expected for some time now. Whether or not the Millennium Bug will be the catalyst for the predicted downturn remains to be seen. Many experts are recommending investors to remain calm. A common sense approach and wait-and-see attitude seems to be the advice du jour. Don't panic. It's fear, say the financial planning pros, that could cause financial markets to slump as we near 2000. Start pulling out of your investments now due to an itchy Y2K trigger finger and you could contribute to a domino-effect dip in the economy. "Even though Y2K can collapse the financial markets, historically speaking it shouldn't affect the investor's objectives," says Stephen Stanton, registered investment advisor for Transamerica Financial Resources, based in Los Angeles. "From 1925 to 1995, the stock market has returned over a 12% rate. Even if we suffered a market collapse, the short-term problem would be more emotionally based than locally. People may pull out of stocks and banks and invest in things like gold, but it wouldn't have a negative effect for long because short-term volatility doesn't impact long-term investments." Les Koyczan, an individual certified financial planner and registered principal with FSC Securities Corporation, a division of Atlanta-based Sun America, agrees. "I have no grave concerns over Y2K. The amount of efforts being put in by companies to fix the problem shows that it's not being ignored." "There's more risk trying to time the market than the risk of Y2K hurting your investments," says Stanton. "Short-term investors certainly need to be concerned, but if you're in it for the long term, I wouldn't worry." Stanton adds that he's more concerned with his local utility company not being Y2K compliant than he is with his investment portfolio's Y2K risk. "If I have $50,000 in my IRA and it's worth only $10,000 tomorrow, it doesn't bother me at all because I know I don't need that money right now," Stanton says. "But if I have $10,000 in the bank and that dwindles down to nothing, I have a much stronger concern -- how will I pay my bills over the next few months? That's why having extra cash on hand this year should be a priority." Whether you plan to ride out the market roller coaster or take a breather, it's important to keep track of your money. Always keep paper records of your transactions and accounts, including mailings from mutual fund companies and brokers. In the unlikely event that there is a Y2K-caused error in your account value, you'll have the records and documentation to compare against. Remember that the burden of proof lies with the investor. Koyczan recommends calling companies and brokerages on January 31 to verify your share's ending value. Then, when you receive your year-end investment statements, compare it to the information you were given on the phone and to the next investment report you receive. Also, make sure the companies you invest in are up to snuff with Y2K compliance. Ask for a report of their progress and request that you be put on a Y2K compliance update mailing list. And don't just take our word for it: Get solid financial and investment advice geared to your needs and goals by consulting with a qualified financial planner. Next week: Tips on where to invest your money to while riding out the Y2K rollercoaster. 1999 Thomson Target Media Erik J. Martin is a freelance journalist who has penned a regular multimedia column for Screen Magazine and has written for a variety of other publications, including the Chicago Tribune, Coverstory and The X-Files Official Magazine. He lives in Oak Lawn, Illinois, with his wife, son, and the Millennium Bug, which he is still trying to exterminate from his PC. Certainly no self-proclaimed technowhiz, Erik prides himself on being "an average guy with the same concerns and questions about Y2K as everyone else. My job? To get answers to those questions, and pass them along to you." Techno file index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA