Coping in a time of extreme investment stress

Should I buy gold?

Are my Ginnie Maes safe?

How do I know if my bank is solid?

Judging by the phone calls and e-mail messages I’ve gotten over the last few days, readers are on edge about nearly everything.

These are anxious times for everyone from professional investors to those who have had their 401(k) plans on automatic pilot for the last five years.

I’m here to tell you it’s OK to be worried, but recognize that you’re in good company.

The stock market is convulsing. The Dow Jones industrial average fell 449.36 points yesterday after rising 141.57 points Tuesday and plunging 504.48 on Monday.

While it’s not surprising that all 30 stocks that make up the Dow fell yesterday, it’s sobering to see only 21 of the 500 U.S. stocks that comprise the Standard & Poor’s 500 index finished the day higher. That’s a broad-based decline.

Whenever a crisis escalates, those who favor precious metals as investments emerge to say, “I told you so.” Gold did jump $70 to $850.50 an ounce in regular trading yesterday - the biggest one-day spike ever.

But let me hasten to add that gold topped $1,000 an ounce in mid-March and had retreated 25 percent until this week’s fall of Lehman, Merrill and AIG.

Even investment instruments often marketed as safe - such as money-market funds - can encounter a “100-year flood” that erodes that safety.

You need to do your homework on the stocks, bonds or whatever you own. That means reading the dry quarterly financial statements and analyzing how the stock you own compares to others in its industry.

In the Internet age, we’re fortunate to have lots of Web-based tools to help us do that. Here some to try: has a star system that rates the safety of banks, savings and loans and credit unions. Five stars is the highest rating. Most banks get three or four stars.

IMoneyNet walks you through what a money-market fund is and how to read a prospectus.

Even with tons of sites about stocks, I still use Yahoo Finance to get up to speed on an unfamiliar company. It’s a good first step.

UPDATED SINCE THE PRINT VERSION: Plus, don't forget about EDGAR and EMMA, two databases that enable you to dive into the documents of public companies and municipal bond issues. EDGAR is the database operated by the Securities and Exchange Commission. And the key documents to read are the Form 10-K (which is a company's annual report), Form 10-Q (quarterly financial statements), Form DEF-14A (the proxy statement) and Form 8-K (which announces all manner of "material events.")

EMMA is a fairly new database run by the Municipal Securities Rulemaking Board. You can search by bond, if you have the CUSIP number. Or you can search by issuer of the bonds, such as the Pennsylvania Intergovernmental Cooperation Authority or the East Whiteland Municipal Authority.