5 financial lessons from the banking mess

The bust is never as far away as you think
4 of 7

The crisis panel found that many of the big players in the financial crisis -- including some of the world's brightest financial minds -- failed to see it coming. In testimony before the commission, financial luminaries, including Warren Buffett and Alan Greenspan, admitted they didn't catch the warning signs.

Wall Street power brokers and individual investors alike are often blindsided by financial crashes, says Grealish.

"These kind of unexpected crises come up with some regularity," Grealish says. "We don't see them coming. Even when there are people out in the wilderness saying, 'Hey, you've got to watch out for this stuff,' there are so many incentives to go with the flow that people don't really pay attention."

Grealish says the best way to avoid being ruined in a bust is to invest with the knowledge that the next bust could be around the corner.

"We all feel we'll know when to get out, that somehow we'll get a sign," says Grealish. "That's why I switched from being basically a stock picker to using indexes, because I finally realized I'm not going to get the signal, and no one else is going to get the signal and tell me."




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