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June 12, 2007 was a significant day in the financial system, as it marks the day Bear Stearns hedge fund speculation became public. Fortune Magazine’s Allan Sloan says it’s important to take the financial collapse into a four-year rather than a two-year perspective. “There has been a lot of damage in three years that you have to take into account when you figure out what to do going forward,” he says, “and people now are making the same kinds of mistakes that they made three years ago.”
Wise investing is still a problem, Sloan says. “[People are] investing in what has been doing well rather than in what’s likely to do well. I would tell them, assuming you have a long enough time horizon, that I sure would rather own stocks that have high qualtiy and dividends and earnings and things like that than on bonds, which are almost sure to decline in value, because interest rates are surely going up.”
Sloan notes that by contrast, stocks are a better place to invest. “It looks riskier, but I think it’s much safer.”
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