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Subject:  Re: Finding a good financial planner Date:  2/9/2005  2:06 PM
Author:  rookieJoe Number:  44440 of 96283

But I think it's a fairly safe bet to say that the bear market isn't over right now...

Based on PEs and other stats I agree that is a strong likelihood. But I wouldn't call it a "safe” bet (I guess it depends on what the definition of the word “safe” is).

A popular quote is “Never treat the likely as certain, or the unlikely as impossible.”

For example, there are a lot of pressures on the US economy and the dollar (google for the current accounts deficit for more info – its not the same as the budget deficit). If the fed loses control of those challenges, a swift substantial decline in the dollar, followed by high inflation is a real possibility.

Do I think it will happen? No.
Do I think the risk of happening is low enough one should ignore it? No.

Owning equities (stocks) is a good hedge against inflation. Owning foreign equities is a good hedge against declines in the dollar.

That's why they say “diversification always works –sometimes you like the results and sometimes you don't.”

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