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After three of the worst years for investors, we offer guidance from top financial advisors

$25,000 are OK with a little volatility in their returns. My clients with more than $500,000 need some reassurance from time to time.

As far as the market goes, I’m cautiously pessimistic. I think it’s easy to want to reach out and grab on to some unrealistic hope. After the second half of 2000, the experts on Wall Street were saying we’ll have a quick rebound in 2001. After another bad year in 2001, they said it would come back in 2002. Now here we are, three years in, and everyone is hoping for another rebound. I say wait and see.

I haven’t added any new money to equities in the last year and a half. I have been putting money in REITs and preferred securities. I’m in a wait-and-see mode. I don’t think it’s important to be the first one in when the market recovers.

DUNAGAN: We’ve gone back to the basics of asset allocation to make sure our clients are not overly weighted in stocks or bonds. Another thing we’ve done is to diversify our clients’ [portfolios] into income-oriented real estate. With all of the foreclosures that are going on out there, it presents an opportunity.

WILLIAMS: Many of our clients are retirees. We do a lot of lump-sum distribution business. We also do quite a bit of business with women, recent widows. Right now, the recently retired group is feeling scared. They are focusing on what would happen if there is a war. We are somewhat optimistic about what the market will do toward the end of the year, but we’re sitting on the sidelines trying to figure out what is going to happen.

CLARK: I’ve been trying to let people know that things are going to get better sooner rather than later. Back in 1991, when we had a recession, people wondered how we were going to get through it, were stocks ever going to come back, and was the economy ever going to pick up. Our forecast was that in three to five years, we should look pretty good, and we went on to have an eight-year bull market, which I don’t think anyone could have predicted.

So today we feel cautiously optimistic. I think Sept. 11 set the economic recovery back between 12 to 16 months. We look forward to better times.

B.E.: Is there anything else about the current economy that investors should consider right now?

CREUZOT: I think we’ve seen a lot of do-it-yourselfers saying, “This is really hard, and I need some help with investing.” Because they’re coming to us, one of the keys is managing client expectations. If you educate people on the front end so they understand that even though we have gone through this eight-year bull cycle, [and that] there are going to be difficult times ahead, then they can clearly understand what to expect from various investments.

We give clients a risk-tolerance questionnaire, which helps us get a feel for what they expect in terms of return, what their time horizons are for the money

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