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Reading between the financial lines

Since 1928, the market has dropped by 20 percent roughly once every four years on average. Thirty-percent downdrafts have occurred nine times since then or about once every decade. One would think that with the Dodd-Frank financial regulations on their way to enactment, we will soon be able to sleep better at night.

But, as Woody Allen, paraphrasing the Bible, once said, "the lion will lay down with the lamb, but the lamb won't get much sleep."

Weighing the risk factor in mutual funds

The ever-inventive securities industry has managed to package yet another type of loan into an investment product for small investors. Banks often make loans to large corporations and then syndicate them -- split them up -- and spread them out to other banks and investors to spread the risk. Recently, there have been a number of mutual funds formed to invest in these syndicated packages.

Time for a history lesson on business cycles

In the wake of a stunning increase in stock market values, this would be a good time to revisit our understanding of business cycles. The Foundation for the Study of Cycles was established in 1941 in an attempt to understand and predict future events in the economy as well as in the stock market.

Today, the foundation keeps track of more than 1,200 cyclical events covering everything from biology to the weather. They are the "go-to" organization for cycle information, with some studies that go back as far as the 1400s.

Taking the plunge without hesitation

Anyone gnashing their teeth because they never got back into what has become a roaring stock market may still have a chance. While the market may have reached all-time highs, I'm like, "Wait. There's more!"

The basis for my chronic optimism this time around starts with the enormous profitability of America's largest companies. Fortune magazine reports that its list of the top 500 largest firms earned $820 billion in 2012, near the all-time record set in 2011. Fifty-three billion dollars of that number was in technology, which bodes well for the Bay Area.

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