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<we were/are well diversified, and have made a couple of decisions lately that (including INTC today) make us feel better about things.

It's a disservice to our FA to blame him for everything, when we are also responsible for what has happened to us...but we are taking a much more proactive approach to finances now.>

I think it is very helpful to post your questions here. There are very few of us who have not had a serious stumble or two along the way. My big one was LU (I know I have a lot of company with that one!). While some may say why cry over spilled milk, I think it is very valuable to go over our mistakes. If we can be objective about it, we can possibly avoid making them again.

I question just how diversifed you were with a 50% drop in your portfoilo. Some people thought they were diversified by having 5 different mutual funds. If they were all agressive growth funds they were wrong. Even funds that sounded like they had different goals had many of the same growth stocks in them. Many fund managers tried to goose their returns this way. It actually worked for awhile, but made for a steeper slide on the down side.

It is good that you want to take responsibility for your mistakes. However, I think you are letting your FA off the hook too easily. Since you stated that you knew nothing about investments, it was even more imperative for the FA to sit down and make sure you were all on the same page at the beginning. He should have clearly established what your risk tolerance was, your LT goals and how you would get there. It may sound counter intuitive, but I think your initial success actually shows just how bad a job your FA did.

The S&P index has a beta of 1.0. It is the standard by which volatility is measured. INTC has a beta of 1.7, which means it is 70 percent more volatile than the index. By contrast many stocks in the asset class of REITs have betas between 0.1 and 0.2, meaning that they are 80-90% LESS volatile than the S&P. Also REITs provide a very stable flow of income to their shareholders, which can be important to retireees whether they retire early or not. They can also provide some meaningful diversification to a portfolio. Has your FA ever discussed them with you or suggested you add them to your holdings? That may be a question you want to add to your list for your next meeting.


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