Before everyone starts leaping and jumping for joy, it is a good idea to put everything in perspective. Since March 2009, stocks have made a remarkable recovery. The bottom had also fallen out of the stock market, so much recovery was needed.
Several people have said they have broken even to where they were before the crash. I offer up scenerios. Those people either weren’t invested heavily in equities or they fed their accounts a lot this past year. For those who have static accounts, the recovery doesn’t come near to breaking even.
According to USA Today:
Once it was clear a collapse wasn’t going to happen, the Standard & Poor’s 500 index roared back 64.8% from its early March low. For the full year, the index rose 23.5%, or 211.85 points, it’s best showing since 2003.
The Dow Jones industrial average rose 1,651.66, or 18.8% for the year. From its March 9 close, the Dow jumped 59.3%. Powered by the recovery in high-tech stocks, the Nasdaq ended 2009 with a gain of 696.12, or 43.9%. Tthe Nasdaq has surged 78.9% from its March low.
Up until March of last year, many people were fearful of opening their statements. If one lost 40% in the crash, and many of us did, it will take a lot more than 40% increase to bring you back even. That’s the math of percentages. I have a 401k that increased by 33.6% but I am not even close to being back to the fall 2007 high water mark. Not even close.