Just my opinion: 1. Diversification is nice, but it needs to be a true diversification. Something like what the large ivy endowment funds are doing - direct investment in distressed companies, hedge funds, private placements, bank loans in addition to their securities portfolios. Unfortunately, joe sixpack doesn't have the capital or experience to access those programs and therefore lacks the ability to be fully diversified. I will admit that I too (like most of you) fall into that category. 2. Its even worse when you figure the average cafeteria plan 401k with high expense and limited options of cash, perhaps one domestic bond fund, and a standard 'style' box selection of domestic equities. I've said it before and will repeat: you are NOT diversified allocating between large cap, mid cap, and small cap equities. Even if you throw in a international stock fund, you are STILL not diversified. 3. You have an inherent position in the currency which you are earning income with. For the vast majority of us, that means we are long USD, short everything else. 4. Cash is also an asset class. 5. I have come to terms with the fact that my cash or whatever short term funds put in 90 day T's @ Treasury direct are going to be net losers over the short term. However, 1) I need some of that money to live and would not like to be concerned about bank runs, etc..., so it has a utility value for me and 2) Better to lose 5% value a year waiting for a good buying opportunity than 20% on $250K like my buddy who decided to buy in to VFINX last summer and is now down because his financial advisor told him that it didn't matter where he bought in since he was invested for the long haul and it would eventually even itself out. Miserable advice, and actually to have paid for it adds insult to injury. OF COURSE, these are merely my uninformed opinions for entertainment purposes only, and you are directed to contact your financial, legal, and tax advisors for advice that conforms to your specific situation.
Are you best off just leaving your money in the Bank? Now the same thing put a lttle more accurately. Are you best off leaving the Bank in your money?
Plan for the future 1. buy a bicycle 2. put 10% of your cash into gold coins - just in case 3. put 10 % a month into blue chip stocks 4. no worries it'll all pick up again when the big boys are in long and Bush is history they'll be talking the market up to 12500 in next to no time.