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For investors, this is era of shrinking expectations

For savers and investors of just about all descriptions, 1992 has been the sort of year that inspires terms like "slim pickings."

Whether you operated in the stock market or the money market, dabbled in real estate or kept your money in the bank, chances are you have found yourself settling for a pretty sickly return on your investment.

Gold, once known for its ability to shine when all else was in disfavor, didn't fare much better. Foreign investments? First the Japanese, then the Mexican stock market got clobbered, and now European interest rates and currencies are in disarray.

Even more telling, perhaps, is the attention being focused on U.S. savings bonds, because of the yield advantages they offer right now compared to most interest-bearing alternatives.

When such an ultra-conservative vehicle attracts the notice of the so-called "smart money," it's a pretty reliable sign that times are lean, indeed.

In these circumstances, most financial advisers counsel patience, noting that years like this come along now and then, even in the most prosperous of eras.

Owners of stocks and stock mutual funds are often advised to add to their holdings in flat or declining years, in preparation for the day when the bulls come back to Wall Street.

But investors in things like bank certificates of deposit and money funds are left to wonder where patience alone will take them.

"Money-market mutual fund and bank and thrift money-market account yields are now at their lowest levels in history," observes Norman Fosback in the advisory letter Income & Safety. "The returns on some longer-maturity investments are at 20-year lows."

Nevertheless, Fosback sees both stocks and bonds as vulnerable to a setback, particularly from the prospect that a stronger economy will push interest rates higher. "With that in mind, we recommend generally avoiding long-maturity investments and settling for the current modest returns on money funds," he says.

If some observers are right, the word "settle" may come up with increased frequency in investment advice for a while to come. These analysts say it is possible, if not probable, that a period of reduced financial expectations has arrived after the exuberant '80s.

"Retrospectively, a characteristic of the 1980s was unusually lavish returns for investors from most asset categories," says Michael Metz at the investment firm of Oppenheimer & Co.

"Unfortunately, we have now entered a period when returns are likely to revert to more modest levels for most assets and could be negative for others."

This presents problems for the full range of investors, from young people seeking growth to retirees concerned with income from their assets.

Even if this vision proves correct, however, analysts argue that it stands to make saving and other money-management efforts more, not less, important for the typical individual or family money manager.

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