A changed world for Financial Advisers

A financial planner, Frank Boucher, has been thrown into despair about financial systems and markets that how those crashed so quickly. He also mentioned that investment the method, “diversification”, did not work in this financial crisis. Bonds are not exceptions. However, we can learn from this depression period. Mr. Boucher recommended that the people who invest in real estates and stock convert to cash or Treasuries. This is a basic idea that if people hold their stock for long-term, their risky would go down. However, most companies’ stocks were cut half in 2008. I think the financial market is like a highway and the car is an investor. The reason is that if it raining, storming, and snowing, every car drives slowly. If an investor wants to make huge profits on this depression period, the investor should take a risk, but if the investor fails on his or her investment, he or she will lose a lot. This is same a driver who is willing to get his or her destination fast in snowy days. The driver could get his or her destination much faster than the others if he or she takes a risk, which means the drivers goes fast. However, if the driver has an accident while he or she driving in snowy days, the accident would be much bigger than accident in regular days. That’s why Mr. Boucher recommends investors to keep cash instead of taking aggressive approach in the stock market.

http://www.businessweek.com/investor/content/feb2009/pi20090210_191817.htm