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“Fear tends to manifest itself much more quickly than greed, so volatile markets tend to be on the downside. In up markets, volatility tends to gradually decline.” -- Philip Roth, American Novelist (b) 1943.

I’m not in the business of giving hot investment tips because I much prefer a properly allocated and diversified portfolio, but I will gladly share a hot tip with you though. It’s a thought process tip and extremely helpful in all sorts of situations. Ask yourself this simple question if you find yourself a bit perplexed over just about anything; “How important is it?”

It’s just that easy. You’ll find that the answer generally falls into one of two categories; “Not very important in the big picture of life” or “Very important and in need of my attention.”

When I’m in good shape mentally, spiritually and physically there’s a much better chance that I’ll slow down, pause and ask myself, no matter what the situation, “how important is it?” This helps to place the situation in the proper perspective. When I focus and do this I save myself from countless impulsive and irrational decisions.

So when it comes to our recent market activity, which end of the spectrum does the answer to “How important is it?” lean towards? The “not very important at all in the big picture of life,” or “very important and in need of attention.”

Well, there are two ways you can handle the kind of markets we’ve seen in the first quarter of 2008. Simply look away, adopting a long-range view that one day the antic volatility of the first three months of 2008 will be seen as an inconvenient blip on the upward trend of market value. Or you can be caught in a frozen stare like a deer in headlights as market values suddenly dash upward only to see those gains evaporate in a steady march back down.

Paying no attention to media accounts of the daily volatility is probably the wisest course. This is difficult to do because the first quarter was laced with drama — but it wasn’t as disastrous as some feared. Save the drama for your mama, as they say.

The major indices closed the quarter up from their lowest levels. Nevertheless, over the three months, the Dow Jones Industrial Average (an unmanaged index of 30 widely held stocks) lost 5.98 percent, the NASDAQ Composite (an unmanaged index of all common stocks listed on the NASDAQ National Stock Market) dropped 13.8 percent and the S&P 500 (an unmanaged index of 500 stocks) lost 8.6 percent. Observers point out that the market in general has returned approximately 75 percent over the past five years, a good run from which a strategic retreat was almost inevitable.

Some of the first quarter drama was provided by the Federal Reserve. In an unusual Sunday move in March, the Fed announced it was lowering the fed funds rate by 0.25 percent and financially backing the takeover of investment banker Bear Stearns by JPMorgan Chase & Co. This was followed two days later by a further 0.75 percent cut in the fed funds rate, dropping it to 2.25 percent, which is down 200 basis points from the 4.25 percent fed funds rate in effect when the year began.

A bright spot was the high-quality bond market. As investors tried to avoid risk, Treasuries moved up and developed overseas bond markets performed well, too, partially because of the rise in value of foreign currencies against the U.S. dollar.

Unpleasant as markets like these may be — with daily tales from the subprime mortgage mess, the liquidity crunch and other banking woes — they are reminders that investing is not a risk-free activity, that the assets in portfolios should be allocated carefully, and that the long-term view is usually the most satisfying.

Only you and your team of trusted financial professionals know how important any given economic event may be in your life. Stay connected with your financial team (or get one!) stay educated, focused and maintain the proper perspective; whatever that may be for you. Your investments and your financial security are very important and deserve your attention.

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Darcie Guerin is a financial adviser and branch manager at Raymond James & Associates Inc. at 606 Bald Eagle Drive, suite 401, Marco Island. Contact her at Darcie.Guerin@raymondjames.com, 389-1041 or toll-free (866) 343-0882.