Well, this has certainly been a tumultuous seven days in the investment markets. Everyone must know by know of Black Friday's massive downward spiral with the Dow Jones dropping its greatest ever point spread in one day.

Fortunately, on Monday, many investors waiting for such a spin stepped back into the market and bought many of the solid old-line companies and some new ones at bargain prices.

In the general scheme of things, though, some high-fliers will not survive as auditors now start issuing "going-concern'' opinions, which mean that they feel it is doubtful the company will survive.

How our `pretend' portfolio fared Warner Lambert leading the way again as everyone decided that drug stocks were good to own. Berkshire Hathaway holding and flat, Puma, Rambus and Nokia still down; the Gap continues to slide from last week, nothing terribly exciting going on, Home Depot not far off last week, Bank of Bermuda slipping a little and Belco up slightly. I tracked the US stocks after Friday's fall, and the values were not much different except for Warner Lambert, which has seen a huge upswing for 101.

I think we all knew that the two hot tech stocks couldn't go much lower and Nokia being lumped in as a tech-related stock got dragged down too. Except for the two best stocks (both favourites of mine) all in the all, the portfolio is down around 10 percent.

After Black Friday, many people may say, well this is just not for me; my nerves could not take watching my hard-earned money bounce around like that! That is fine, but consider if you are one of the baby boomers, and the first group turned 55 this year. It is estimated that more than 50 percent of these babies have not saved enough and at 55, are running out of time to save.

So, you have three main choices: 1. You take on two additional part-time jobs to catch up; 2. You learn to live very simply and make do with less; and 3. You invest some of your savings in the market assuming more risk for a greater rate of return in a shorter period of time.

Investment advisors all talk about risk. What is it? Well, we all saw only too well what happened last week. That is the risk of the market going down, way down.

But what about you? What is your risk profile? Risk -- everyone has risk in his or her lives! Some say that living is a game of chance, and if you happen to be born lucky, your star will always rise.

Risk is falling off your porch sober or after a couple of beers, and breaking your arm.

So, what we are saying about risk in your life generally is; Can you: 1. learn how to avoid risk 2. learn how to control risk 3. know your risk of loss (what is the downside? Traders love this word, but they love upside more!) 4. make a decision to accept the risk after having considered the consequences, or to totally reject taking the risk.

If this sounds like General Insurance Concepts 101, well, in a way it is. But it is also a factor that you must consider every time you make an investment that is not guaranteed. And at the risk (pardon the pun) of sounding incredibly tedious, there are ways to minimise risk in your personal and financial life.

So here it is. When we financial planners (investment managers) assess a client for the risk he/she is willing to tolerate, we may give them a questionnaire to fill out. One of the line items asks how would you feel and how long would you be willing to hold out if your investments dropped 20, 30, 40, 50 percent in value? Most people indicate that they could not stand more than a 20 percent loss for more than two years. In many cases, though, people cannot even accept that kind of loss, even though they think they can.

To find out how you really feel, why not pick a stock that just simply crashed? How about one in the Mock portfolio. Start tracking that stock (use your Bloomberg lesson) over the next six months and let's see whether it comes back. Oh, and I forgot, the first part of the game is that you have to pretend you paid what the mock portfolio did, say Rambus at $350 per share. If you had invested, say $20,000 in this, how long would you really be willing to watch this loss? Would you feel that you might as well sell, and get back what you can? So, what happens if it doesn't come back? You have learned a tough lesson, and should start the process of diversifying to try to control and minimise your risk. A well-diversified portfolio should have at least 30 stocks and a few bonds in it.

Our mock portfolio is not there yet, but in the pretend world, I am allowed to buy them gradually over time to demonstrate the market activity.

What is another name for a portfolio? Mutual funds. Your new Bermuda National Pension Scheme contributions are invested in mutual funds. You have a vested interest in calculating the amount of risk you can tolerate.

By spreading out the purchase of stocks by capitalisation, sector, geography, volatility, company fundamentals and many other criteria, analysts and investment advisors compose portfolios for their clients that are tailored to the amount of risk the client is willing to accept.

And so we come back to the old adage don't put all of your eggs into one basket.

The only time that you are allowed to do that is at Easter. Happy Easter, everyone.

Next week, Part Two on diversification of investment assets.

Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or any other investments. Readers needing specific assistance should seek professional advice from their financial advisor.

Martha Myron CPA CA is a Bermudian, holds a Series 7 NASD license and is a United States federally authorized tax practitioner. She is Programming Chair for the International Association for Financial Planning/Bermuda. Questions regarding this article may be sent to her at 234-0290 or Email: marthamyron y northrock.bm Market madness: Traders signal and record their trades in the Nasdaq 100 Futures pit of the Chicago Mercantile Exchange during the recent markets tumult.