The world of finance is now upside down

We don't have a term for it yet, but maybe it will be the October Avalanche(10/07). October of the year before last was the beginning of a dramatic financial slide that changed the world.  

The Dow Jones went from over 14,000 to under 7,000 by March of this year. The financial slide happened all over the world.

There are three important lessons about finance to learn.  First, no investment strategy that was known before 10/07 was reliable protection. None.  No form of diversification worked.  Harvard, Yale and Stanford lost as much as the rest of the financial world.

Second, the whole world is a single volatile financial system.  We have no idea how far back that reality goes but it began more that 170 years ago as gold and industrial commerce started their long journey. We have to learn to live with this volatility...we may never understand it.

Third, the financial system and the commercial system are only loosely connected.  While the financial system fell dramatically in October 2007, several nations went bankrupt and more were nearly bankrupt, yet..... many economies showed little effect.  China and India continued to grow vigorously the entire time and U.S. output barely slowed down for a couple of quarters (despite the absurd statements of the political world and the legacy media).

Let's face reality.  There is not now and may never be a safe long term financial investment strategy.  We must decouple the financial world from the commercial world.