Financial planners today are getting bombarded with all kinds of advice from a variety of sources including banks, stockbrokers, insurance companies, and the like. This is especially true with investors who have seen their portfolio values fall dramatically in the past three years. Everyone seems to have a different opinion on what is best for you and your clients. One claims the stock market is too much of a risk and that the bond market is "safe." Another says the opposite is true. I don't imagine that anybody has the right answer, probably because there is no right or wrong here. What may work on Monday may not work on Tuesday, and what applies to one client may not to another.

Best advice according to the financial gurus? No advice! Just watch and listen.

Of course, a couple of tidbits might be in order. To some, this may sound elementary; to others, not so. For example, when matching stocks against bonds, history has shown that stocks, for the most part, have offered the best prospects for growth over a long term. It has produced an average annual return of 10 percent since 1926. On the other hand, look at corporate bonds, especially the long-term vintage. They have posted an average annual return of approximately 5 percent over the same period.

So, what's the answer?

Most experts will agree that asset allocation is of utmost importance together with staying focused on long-term goals. In other words, don't make investment decisions that are primarily based on what has happened recently. To come out ahead and to reap the potential benefits of asset allocation, it is highly recommended that investors maintain a constant commitment to stocks, bonds, and cash funds, and to basically look the other way as to what is going on around them in the financial markets.

Kathryn Head, President of First Investors Management Company, points out that investors who maintained balance in their investment portfolios during the bull market of the late 1990s "have seen much smaller declines in their portfolios during this grinding bear market, and as a result are in a much better position to reap the benefits of the stock market's turnaround when it occurs."

She adds that conversely, those who invested heavily in aggressive stock funds have been hit hard, causing many to panic and head for the sidelines. "When the stock market turns, they will miss out." Note that Ms. Head says "when," not "if."

Me? I'm optimistic. I'm staying pat right now.

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