Financial crisis rewriting the rulebook on personal investing

By: Mark Jewell
Posted by: Scarlett Lu


BOSTON — Stocks always rise over the long run. Bonds are for retirees and investors with little taste for risk. Companies rarely cut their dividends.

Those are three of the long-followed rules of investing — and rules that, as investors learned during a year of the stock market's worst turmoil since the Depression, can't always be counted on.
The new rules: Bonds might be the better long-term bet. Diversifying your portfolio means more than just picking different types of stocks. And nothing, including the humdrum money market fund, is risk-free.

Not even blue chips such as Dow Chemical and General Electric, once considered so reliable they were deemed to be good for widows and orphans, were safe when everything seemed to be crashing.
At their lowest points over the past year, a share of GE or Dow could be purchased for less than the price of lunch at McDonald's. And both companies slashed their sacred dividend last year — Dow for the first time in 97 years, GE for the first time in 71.
As the meltdown helped take out half the stock market's value from its peak, investors and advisers began to question the time-honored strategies of the longest investing binge in American history, dating to the start of a bull market in 1982.
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