an important component of this process. statistics show that in recent decades shares have made up an increasingly large proportion of households ’ financial assets in many countries. thirty years ago in sweden, bank deposits and other very liquid assets with little risk made up almost 60 per cent of households ’ financial wealth, as against less than 20 per cent today. the major part of this adjustment in financial portfolios has gone to shares but a good deal now takes the form of insurance saving. the trend towards forms of saving with a higher risk has been accentuated by new rules for insurance companies, permitting a high proportion of shares, although this is arranged more indirectly. similar tendencies are to be found in other industrialised countries. so it is not just in sweden that saving has moved away from traditional bank deposits. this is a positive trend. however, long - term saving requires an ability to manage the associated risks. stock prices fluctuate widely, in marked contrast to the stability of bank deposits. this is something that could affect not only the individual investor or household, but also the economy on a large scale. therefore, i think it ’ s important to discuss the risks of the financial sector in general and the stock market in particular. this could be even more important now that so many newcomers have entered the stock market. allow me to quote the following : “ with each passing year, the noise level in the stock market rises. television commentators, financial writers, analysts, and market strategists are all overtalking each other to get investors ’ attention. at the same time, individual investors, immersed in chat rooms and message boards, are exchanging questionable and often misleading tips. yet, despite all this available information, investors find it increasingly difficult to profit. … stock prices skyrocket with little reason, then plummet just as quickly, and people who have turned to investing for their children ’ s education and their own retirement become frightened. there appears to be no rhyme or reason to the market, only folly. ” this is a quote from the preface to a recently published biography about the well - known and long term value oriented investor warren buffet. buffet began his career forty - five years ago with only 100 u. s. dollars and has over the years built himself a multibillion - dollar fortune. i quote the passage to illustrate a view held by some of what was going on in the stock market during the end of the 20th century and the beginning of the 21st. learn from new theories from experience

banks and other financial institutions should become more consumer - oriented, instead of today ’ s greater focus on products. the increased exposure of households to the stock market calls for tailor - made plans for the life cycle that take all important risks into account. central matters here are, of course, investment horizons, how buying and selling is arranged and the degree of diversification across companies and geographical regions. another parameter is, as indicated, the morris, stephen and hyun song shin ( 1999 ) : oxford review of economic policy, vol. 15, no 3. life cycle ; the possibility of saving for the long run is restricted by how much capital is likely to be needed in the nearer future. admittedly, this process has to some extent begun already. however, the decisive steps lie ahead.