Rewriting Investment Rules, Post-Meltdown

By Mark Jewell, AP Personal Finance Writer

BOSTON (AP) — Stocks always rise over the long haul. 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 may 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 like Dow Chemical and General Electric, once considered so reliable they were deemed good for "widows and orphans," were safe when everything seemed to be crashing.

At their lowest points over the past year, each stock could be purchased for less than the price of lunch at McDonald's. And each company slashed its sacred dividend — Dow for the first time in 97 years, GE for the first time in 71 years.

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.

A historic rally over the past six months has restored some wealth and given everyone time to think about what went wrong and what can go right again. What's emerging is not so much rejection of old ideas but an effort to adjust them to fit a more unpredictable market.

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