What lessons have you learnt from the severe bear market over the past 12 months?
Probably plenty. But after some careful thought, most sensible investors would no doubt agree that the overriding lesson for private investors is that the basics of sound and commonsense investment practice make sense in all markets - good and bad.

In short, these are the importance of having a diversified investment portfolio, investing for the long-term, avoiding emotionally-driven investment decisions, taking a highly cautious approach to gearing, never overlooking that higher returns involve taking on a higher degree of risk, and only putting your money into investments that you can really comprehend.

On the last point, the Australian Securities and Investments Commission (ASIC) has some simple advice about seemingly sophisticated investment products: "If you can't understand it, don't buy it." This makes much sense to me. Read ASIC's checklist  for complex investment products.

A key characteristic of investment, of course, is that new investors are continually taking their first plunge into investment markets. Many would never have had practical, hands-on experience of why the commonsense basics of good investment practice really matter.

In a recent newsletter aimed at providing an easy-to-read overview of the global financial crisis, one fund manager points out that the downturn demonstrates the investment cycle is "alive and well". The bull market had run for so long that this reality would have been overlooked by many investors.

And the manager adds: "[Investors have been reminded] yet again that periods of great returns are invariably followed by a fall back such that long-term returns are more consistent with underlying economic growth.

"If returns are too good to be true, they probably are." Too true!