The Risk Tolerance of Tort Victims in Today's Market

Tuesday’s edition of the Wall Street Journal included the weekly feature "A Week in the Life of the DJIA" (Dow Jones Industrial Average.  According to the Wall Street Journal, if you invested $1,000 on December 31 in each of the current Dow Jones Industrial Index stock components (30 companies), your return would have been $26,034, or a loss of 13.22% on the $30,000 investment, including dividends. 

In assessing the risk tolerance of tort victims, at least one relevant question to ask is how they would feel if they invested a sum of money and a short time period later it was worth $X less (calculated at 5% loss) or $X less (calculated at 10% loss of capital). A Florida based financial planner dismissed the relevancy of this very question in a case earlier this year. I wonder what he and the tort victims who listened to him are thinking now. Various reports suggest that the market is currently 20% off the October 2007 high.