Risk. Investing is risky business. So how did your stock broker or advisor protect you from risk? If I can use a little bit of psychic ability I’m seeing that he or she told you that you needed a “diverse portfolio.” And to create this diverse portfolio he or she said you needed a combination of stocks (i.e., mutual funds) and bonds (i.e., bond funds). How much you should have in stocks and how much you should have in bonds was based on your “risk profile” and your age. And if my psychic abilities are holding up this little exercise in “diversification” was the only tool your broker used to manage your risk. So to channel Dr. Phil, how did that work for you? Bottom line:
Did Your Broker’s Plan Work?
How did your diversified portfolio stand up to a real bear market? The mental picture I’m getting is you had big losses in your “diverse portfolio.” Somehow diversification didn’t prevent catastrophic losses. And now I’m hearing your advisor telling you “Hang in there” “You’ve got to stick to the plan.” I spoke with an advisor at a party the other day who said she was trying to keep her client’s spirits up. Well if the strategy most all advisors implement actually worked, then your broker wouldn’t need to be your psychologist or your cheer leader.
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