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.
Analysts do not expect the current rate of increase to continue. While the pace will slow, the markets are still expected to do well. There is a great deal of superstition about the first day and week of the new year. I guess we get a sneak peak tomorrow. I am keeping my fingers crossed that we have a bang up day and that the bulls will run hard.
Have investment strategies changed with our readership? Those who went conservative missed out on the the biggest rebound since the Depression. I was too paralyzed by fear to do too much. My account that lost the most was the one I pay to have managed. Go figure. And I like the manager. He is reasonable and knowledgeable. I don’t blame him.
Then there is the dollar scare which I have never figured out. How does this affect how we invest? How about buying gold and silver?
Disclaimer: Any discussion about investment is only discussion, not advice. Call your financial advisor if you want professional advice. If there is any other disclaimer I need to put up, someone tell me!