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Much has been written about the lost decade in investing. That may be old and we are probably about to discuss the found decade in investing and it may not be long before we realize it. Those who like to scare will use data points that reflect their point and keep using them over and over even after time passes. Yes we were at a point where the previous 10 years had been from the pre tech bust market high to the low points of the recent recession. However as we move forward in time the last ten years will measure from WTC bombing lows. When the markets closed on Sept 17 2001 after being closed for six days the closing averages were:
Dow-8920
S&P- 1038
Nasdaq- 1579
No one knows with certainty what the closing averages will be on September 17 2011 but right now the decade is looking a lot better than it was measuring it from the Tech Boom period to the 2009 lows. The high of the Dot Com boom was March 10, 2000 so measuring ten years later was not real pretty. How ugly was it from March 7 1999 to March 7 2009? However time moves on as do valid time comparisons. What is interesting is that when you look at mutual fund performances over the last 10 years they are starting to look better and better.
Food for thought and I know many of you already know that but the need for constant negativity for some doesn't encourage others to invest for their retirement. As I suspect MathJak would concur there is good reason for three buckets as your long term bucket enables you to ride decade long storms out.
In summary, soon the ten year comparisons will be from the post 9/11 era.
your very correct. the reference points are only as good as the last reference point used. why dont we reference from the crash of 1987?
funny how no one expects to buy a stock at the low or sell at the exact high but yet we keep referencing those market index points like they mean something.
if you bought google at 90 and sold it for 400 you would think you did great, if you bought it at 90 ,rode it up to 800 and it fell back to 400 you think you lost money.
the indexes are only one measurement but not the entire story. while the s&p may have been down for the decade many funds did okay.. my own mix of nothing special fidelity funds was up 53% on the decade.. the other the permanent portfolio concept was up over 9% cagr annully over the decade.
indexes only mean something if you follow that index in your investing.
think for a minute about nasdaq. google and apple make up 30% of QQQQ index... if anything happened to them the nasdaq index will get pounded,but if your fund didnt own them it may be a slight effect.
its all about having a plan that works on all market cycles . you have to get this reference thing out of your head too. its like working on commission. each year is a new year and the fact you made more money in a particular year doesnt mean thats your reference forever.
Often the real losers are those that thnik the markets are like savings accouts. That iis often the dofference between mnay investments and what pension funds investments gain. There are always losers and gainers in markets lie most things in life.Whe you see a market crash like i 2008 it just means that more are losers as values go down.But then savers were safe but now they are not gaining as much .
In addition to the stock market people should really stay diversified and not put all their money into the stock market. Especially as you get closer to retirement, the less you should have in the stock market. I've read many posts over the past few days from this retirement section and read a few posts from people close to retirement that "lost big amounts of money in the stock market the past few years".
The trick is to stay well diversified with asset allocation. For many that don't really understand the stock market...it can be a very dangerous place with your retirement savings.
yes, my dear dear neighbors in their mid 80's lost so much money during the Lehman crash...what the heck they were still doing in the stock market, I'll never understand (and didn't ask). I think it happens more than we know about. I guess they get fearful and think they just have to somehow be making more money...
The market has more than bounced back from the Lehman crash and those who stayed put have their money back plus. People were quick to talk about how much they lost by March 9, 2009 but reluctant to discuss how much they made back. I blame a lot of this on the media and anchor folks like Brian Williams. I remember him always talking about how many trillion the economy had lost as the market was tanking, but has he commented on how many trillion has been gained on the way back? Folks invested know when they get their statements and many don't do anything but smile. Before today the S&P was up how much since March 9, 2009? Did someone say something like 97% could that be right? Please can someone verify that.
The S&P 500 was recently trading at 1334.88, more than double its intraday low of 666.79 on March 6, 2009. The index's gains were led by materials and consumer discretionary stocks, after positive earnings in those sectors.
The market has more than bounced back from the Lehman crash and those who stayed put have their money back plus. People were quick to talk about how much they lost by March 9, 2009 but reluctant to discuss how much they made back. I blame a lot of this on the media and anchor folks like Brian Williams. I remember him always talking about how many trillion the economy had lost as the market was tanking, but has he commented on how many trillion has been gained on the way back? Folks invested know when they get their statements and many don't do anything but smile. Before today the S&P was up how much since March 9, 2009? Did someone say something like 97% could that be right? Please can someone verify that.
Tuborg,
I agree the market came roaring back but again I'd stress to stay well diversified and I still don't think the stock market is the place to have the bulk of your funds if you are older and close to retirement.
You have to keep in mind that if you were in various sectors like financials or homebuilders or other sectors like bond insurers... some of them have come back but some of them went totally bust. There is no coming back if you owned a bunch of financial companies like AIG, Fannie/Freddie, Washington Mutual, et.al. Some of them totally collapsed never to recover for the shareholders.
So yeah, it's good to have some exposure to the stock market early in life before you retire but it's certainly not the place for many close to retirement. It's important to check your exposure and diversify and be in safe investments.
Although the stock market has come roaring back, much of the reason is the very very low interest rates and the government almost forcing people to put their money in the stock market. The market could very easily fall again heading into the future.
the problem most people have is finding out what the term diversified really means. most were bewildered when their supposed diversified portfolio all tanked at the same time.
true diversification means on those big market ralleye days if nothing fell your not really diversified.
the other problem is most folks dont like to own what they think is poised not to do well so they leave that out of the mix.
they also never buy enough of what they dont feel will do well to even have it fly fighter cover for their portfolio..
2008 showed us that stocks and corporate bonds are correlated together more then opposites. on the other hand treasuries are not the same as corporate bonds. when that flight to safety comes treasuries soared while corporates dropped.
even gold and commodities are not the same thing. 2008 saw commodities plunge by 50%, gold broke new highs.
in order to be diversified you need to do your homework to see just what diversified really means.
I agree the market came roaring back but again I'd stress to stay well diversified and I still don't think the stock market is the place to have the bulk of your funds if you are older and close to retirement.
You have to keep in mind that if you were in various sectors like financials or homebuilders or other sectors like bond insurers... some of them have come back but some of them went totally bust. There is no coming back if you owned a bunch of financial companies like AIG, Fannie/Freddie, Washington Mutual, et.al. Some of them totally collapsed never to recover for the shareholders.
So yeah, it's good to have some exposure to the stock market early in life before you retire but it's certainly not the place for many close to retirement. It's important to check your exposure and diversify and be in safe investments.
Although the stock market has come roaring back, much of the reason is the very very low interest rates and the government almost forcing people to put their money in the stock market. The market could very easily fall again heading into the future.
It has still come roaring back and profits have been taken. If you maintained the same mix before hand the comeback may reflect the ride down. Most mutuals and many ETF's offer diversification. Depending on your financial situation being heavy in equities can and does still make sense. Just because you are 63 doesn't mean you don't have a long term horizon of 30 plus years. If you are planned to a minimum age of 94 you still have many out years for part of your portfolio. Again that is why many of us follow a 3 basket forumula with the third basket being 10 years or more out before being needed. Many have pensions in addition to SS so the size of their short term basket is not as great. In fact those holding gov't bond funds may want to look at the change in their NAV price of late and realize that is the price they will get if selling shares in the fund. When you were 25 you were saving/investing short, medium and long term and now is no different for many of us. A come back is a come back and my beach home appreciates the Fed mucho!
We all agree basket one should be in safe investments and the ratio of the basket differs for each individual based on other income streams. The last two years and today is the anniversary has been a great opportunity to get your portfolio well ahead of inflation trends for quite some time. It all boils down to the individual and their risk tolerance and the resulting likely ROI.
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