Area analysts' views mixed on what will happen next.

Byline: Lisa Eckelbecker

Another weekend, another road bump for small investors.

Individuals turned to their portfolios and 401(k) retirement plans yesterday to find that another weekend of events on Wall Street had taken a toll on their investments. Investment bank Merrill Lynch & Co. agreed to be bought by Bank of America, insurance giant American International Group Inc. scrambled to raise cash and, after the government refused to bail it out, Lehman Brothers Holdings Inc. declared bankruptcy.

The news sent the Dow Jones Industrial Average down 504.48 points, or more than 4 percent, to 10,917.51. The technology-heavy Nasdaq Composite tumbled 81.36 to 2,179.91.

The volatility came one week after the federal government announced plans to put Fannie Mae and Freddie Mac, agencies that hold or buy mortgages, into conservatorship, and it followed months of housing market turmoil that has littered neighborhoods across America with foreclosed properties and brought down investment bank Bear Stearns.

Some investment advisers and experts said that although downturns bring opportunities for buying, they understood that some individuals might not feel ready to spend.

"There's a tendency to panic. This is your money. You want it to be there," said Shana A. Orczyk, a research analyst at Peak Financial Management in Waltham. "The fact is, the market goes up more than it goes down. On a day like today, when the market is bad, you want to be a buyer rather than a seller."

Yet the chatter of the day wasn't exactly calming.

An economics professor at New York University suggested that Americans were correct to be concerned about their bank accounts. Consumers raised questions about their AIG insurance policies on a Washington Post online chat.

These are the types of days that investment advisers like to say, "Have a plan. Stick to your plan."

"This has been going on for some time, so it should not come as a surprise," said Gary H. Sherr, vice president of Carl P. Sherr and Co., a Worcester brokerage. "The last thing you should do is panic."

Planning, however, isn't always easy. That's because investors are living during a period of "suboptimal" market returns, according to Kevin T. Grimes, principal and portfolio manager of Grimes & Co. Inc., an investment and financial planning firm in Westboro. Even there, however, opportunities exist, he said.

"The key is to stay diversified, and in general in this market right now, we're just seeing, I guess, a very reasonable value for the overall market, and you'll probably see the market begin to appreciate at some point from these levels," Mr. Grimes said. "The market is pricing in the worst-case scenario stuff."

What might that be? A recession. A global economic slowdown. Higher unemployment. The stock market sits at a level that assumes all that and maybe more will happen, according to Mr. Grimes.

"Any sort of reprieve from worst-case scenario events should mean a higher market overall," he said.

Yet experts caution against getting swept up in a buying spree. Stock in some high-quality companies with a track record of paying dividends is attractively priced, they said, but other stocks are cheap, too.

"I'm not one of those that thinks today is a day to buy financials," said Ms. Orczyk. "I think there's a fundamental problem there, and it's tied to the housing market."

In addition, more difficult economic news likely lies ahead, said Thomas J. Bartholomew, president of Bartholomew & Co. Inc. of Worcester, a private investment planning company.

"We're very cautious here now, knowing that third-quarter earnings are going to come up beginning in October, and we're going to have increasing unemployment numbers," said Mr. Bartholomew, referring to a recent Labor Department report that applications for unemployment assistance are up. "We're remaining very defensive."