Wednesday, April 1, 2009

The Good, the Bad and the Interesting - Part I

Let's start with the Good, because it's more fun than the bad. The table below shows the returns for US Stocks over the past month, represented by four asset classes that we generally place in our client portfolios. We pretty much equal weight these asset classes, so the average return is fairly indicative of the part of our client portfolios allocated to US stocks (please see here for all relevant disclosures, methodology, etc.)

What the table shows is that US Stocks were up 8.9% in March - Yippee! I don't know if this is a new trend, a sign of the bottom, a head fake, a "dead cat bounce", or anything else. What I do know is that it just feels good to see an up month.

It is also pretty remarkable how strong returns were for the 16 trading days since March 9th, at 19.3%. In my opinion this shows the folly of market timing. For a long term investment strategy to work, you need to be invested during the short periods when most of the positive returns take place. I doubt we could find anyone who said on the morning of March 10th "Get in today, you'll make almost 20% over the next three weeks!"