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In the first two or three years of the 21st century (depending on when you start counting), investors received some costly lessons, lessons which should teach them more about investing than they had learned in the preceding 70 years.

These lessons came in the form of the following events:

Each of these events taught investors that they had been overly optimistic, ignoring risks, obvious or not, that should have dampened this optimism.

The dot-com bust taught us that hope and speculative fervor do not create corporate profits, and that security values will eventually reflect the true economic value of the underlying business.

The Septemeber 11th events taught us that, even in the case of well-run businesses, external events can occur which overwhelm the existing economic realities and undo a business that had previously been highly profitable.

The Enron debacle taught us that, even in a country which is supposed to have the most effective financial reporting requirements in the world, you just can't trust the numbers.

... more to come ...

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Revision r1.1 - 22 Jan 2002 - 17:21 by EliMantel web search for EliMantel
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