In recent weeks two of the key markets for individual investors - residential property and Australian shares - have given us strong reminders that all markets move in cycles and we ignore that basic concept at our peril.

Now one of the great myths in investing is that you never lose money investing in property - but depending on which survey you want to quote Sydney property values are off anywhere from 10 to 20 per cent in the past 12 months. Melbourne values seem to have plateaued after also falling last year while a lot of publicity is focusing on the inner city apartment market with some investors taking legal action in an attempt to get out of settling on properties.

One of the biggest issues with residential property market is the lack of timely, accurate pricing data. After all most of the weekly sales data relies on real estate agents to provide it and they are hardly independent.

But loan approvals reported by the Reserve Bank do provide a good insight into the market and in August the value of lending to investors fell just over $5 billion or 4.3 per cent. That is a clear sign the investor appetite for residential property is continuing to slow.

Which for people looking to buy a house to live in is good news - if investors are not bidding up the prices affordability is likely to improve.

The sharemarket has the opposite problem to housing - there is almost too much data to analyse and it is being updated minute by minute.

Even when the property market is in a slump investors do not have to contend with the evening TV news telling them that they have lost another few thousand dollars today.

The Australian sharemarket has rewarded investors handsomely in the past 12 months - the S&P/ASX300 index was up 30% to the end of August so a demonstration of market volatility early in October was probably a healthy reality check.

The message from both the property and the sharemarket is that markets will move in cycles and to expect otherwise is foolhardy. It also underlines the benefits of diversifying across different asset classes so that your fortunes are not hostage to the rollercoaster ride that any single asset class may give you.

Finally the discipline that professional financial planners and institutional investors use of rebalancing portfolios back to set asset allocation levels is brought into sharp focus when a particular market has had a strong run.

Whether it was property three years ago or shares today a review of the balance within your portfolio and a check against your long-term financial planning goals makes good sense along with a healthy respect for markets and the economic cycles that drive them.