Friday, June 1, 2012

Have the Rules Changed?

Pathways Advisory Group, Inc.

It has been a rough time period for investors.  Global uncertainly remains high and wounds from the recent bear market are fresh.  But, have the rules really changed?  No – we have been reminded what the rules have always been.  Investing is difficult.  Diversification is not a panacea.  Economics is an inexact science.  Market timing is hard if not impossible.  Sitting on the sidelines is costly.  Short-term high-grade bonds offset market volatility.  Finding the “right” balance between loss aversion (the amount you can afford to lose without deviating from the investment plan) and rate of return remains paramount.  And investor behavior affects investment results.  A recent New York Times article Why Panic? A Couples Nest Egg Better Left Alone  highlights a real life example that many investors can relate to.  If all else fails, remember this chart from Carl Richards, CFP®

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Similar Topic:  We originally touched on the (not so) “lost decade” in a December 2010 post Was it really a “lost decade” in the stockmarket?

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