Wednesday, March 10, 2010

One Year Later

It was exactly one year ago yesterday, on March 9, 2009, that the global stock markets hit the bottom which followed the financial crisis in the fall of 2008. (They actually hit bottom first on 11/20/08 and then retested those lows on 3/9/09). The table below is an update to similar tables I have posted in the past, and it shows what has happened to stock markets in the one year since the bottom:

These levels of return are pretty remarkable, with Small Cap Value, Microcap, and Emerging Market stocks up over 100% in the past year. Of course, that level of return will certainly not continue, and we should expect to see some down periods as we move forward. However, it has been a powerful recovery from the brink of disaster--which no one that I know of predicted. I would challenge anyone to find one respected market commentator who said a year ago "Better buy stocks now, because they are about to go through the roof!"

Unfortunately, I have seen many articles and TV spots referencing this one year anniversary while posing the question of whether now is the time to get back into the market. My answer, of course, is that if you panicked and sold out of your stocks during the downfall, then there isn't a good time to get back in, especially not now after such a run up in prices. By sticking to our Investment Policies and remaining disciplined and forward thinking, our diversified portfolios have succeeded where many market timers have failed. Stocks are the appropriate place for long- term investment. As I have said ad nauseum, trying to time when to get in and out of the stock market is a recipe for losing money. The principals of Asset Allocation, Diversification, and Keeping Portfolio Expenses Low have again allowed us to successfully weather the worst of the storm, while achieving long-term portfolio growth.