[quote=“spook”]One of the few good things that have come out of the current financial meltdown is we now have a definitive metric for separating the financial planners from the financial daydreamers. It’s the question ‘did you have any inkling the world was about to be hit by the worst financial downturn since the Great Depression and, if so, what did you do about it?’
If the answer is something along the lines of ‘no, not even an inkling’ then you know you’re dealing with a financial daydreamer and it’s time to move on. If the answer, on the other hand, is something along the lines of ‘yes and . . . cash’ then you know you’re dealing with one of those rare individuals who is actually worth paying money to for the purposes of helping you plan your financial future.[/quote]
Sorry, but your “definitive metric” seems a pretty poor test to me. The great majority of people I know in the industry, and every responsible investor I know saw what was coming. And of course if you ask anybody in the industry, they will tell you they saw it all coming and that they moved their clients to cash. Yeah, right. Only a statistically insignificant number got clients’ money out of equities and structured finance tainted fixed income investments at appropriate times. Of the few that did, hardly any will be able to repeat that performance when the next bust comes around. Only a tiny handful had the foresight to actually short structured products, and these people were only able to do so because they were among the few math geeks in the industry who were not on the sell side of that business. In short, they were one trick horses, not the kind of people you would want to keep your money with cycle after cycle.
Managing your investments is not rocket science. Understand what risk is and what your level of tolerance for it is. Manage your own porfolio rather than expose yourself to manager/advisor risk. But I think you know that.