On one hand, investors should not be too pessimistic, particularly at times of prolonged market downturns. They must also not become too optimistic during sustained bull runs.

A financial planner can play a key role here as the voice of reason.

However, there is a large number of sharks out there who make money by preying not only on people's fear, but especially on their greed.

The sharks convey a deceptive message, which investors would quickly see through if they used their common sense.

But too often investors badly want to believe in the possibility of an easy road to wealth and so do their best to blind themselves to the warning signs.

During the technology stock bubble of the late 1990s, many people warned about the dangers of investing in speculative stocks and technology funds.

Such funds included those promoted by respected brand names in the financial services industry.

As an investor, maintaining your faith in time-honoured investment principles is sometimes difficult. This was particularly so when, for several years, technology stocks, especially the speculative ones, seemed to produce extraordinary returns compared to what could be regarded as realistic and appropriate for investment.

In retrospect, the effort of maintaining discipline seems worthwhile. Most of the speculative companies have totally disappeared and even the better-quality technology companies will take years to recover their highs, if ever.

During the past three years, internationally, the sharks have converged around the property market.

Property is a legitimate means of creating wealth. More people have made fortunes in property than any other investment class.
Sadly, more people have also lost their fortunes here than anywhere else.

It is important to put into perspective the fact that long-term residential property should produce a return a few percentage points above the return on cash and a few percent below the return from a well-structured share portfolio. But the general property market is far more treacherous than the share market.

The heterogeneity of the market, the lack of transparency and the wild inaccuracies in valuations make the property market particularly susceptible to the actions of sharks.

It is worth investigating the distortions that inflate property market returns. Though I do not believe it is possible to predict what will happen in the property market over the next few months, it is important to note the potential vagaries of property distortions.

They are creating an unnatural environment, as I have tried to point out to investors over the past number of months.

There are sharks who are trying to exploit the situation while it lasts. An interesting example I saw of this is an advert for a very expensive property seminar where they promise to show you how you can make a quick fortune by investing in property.

This is not possible in the long run. You may get lucky (and that is gambling, not investing) but the odds of this happening are getting smaller by the day.

The reason for this is that property prices have risen dramatically over the past few years. In my discussions with friends who are credible players in the property market, we agree on most issues but differ on where the market is likely to go from here in the short term - none of us know!

The logic from one point of view is that the dramatic rise over the past few years is not a bubble but merely a case of real estate returning to its rightful value. As such there will be no collapse.

The alternative view is that the rise has gone too far and that there is too much steam in the market, requiring a cooling-off.

However, where there is no debate is that the historic returns currently being bandied about cannot be sustained. This is the key point.

So, at best, investors will receive a reasonable return in line with long-term expectations in the property market. The worst-case scenario is that there could be a sustained downturn that could be longer and deeper than many have been predicting.

Right now there are certain products that have been structured for the retail market with property serving as the underlying investment.
They are being marketed on the basis of the spectacular returns of the past few years and are likely to be highly speculative in nature, notwithstanding their promotion as safe investments.

Many of these structures are not as well regulated or as transparent as they should be. And while certain sharks are pushing these schemes, the distorted way in which property returns can be reported has contributed to a much broader miscalculation of the property market as a whole.

It may take the property market a while to wake up fully to these problems.

When the property market does see the light, attention will inevitably switch to a new "safe" way to make fast money.

This will be promoted by a new generation of sharks, who, inbetween rising from obscurity and being sentenced to jail, will be lauded for a while as the heroes of their time.

Financial planners must inoculate their clients against such infection.

This is where they add value to clients. It is an area that is often underplayed, at investors' peril.

Bradley is the vice-president of the Financial Planning Institute