A recent article (September 2008) in a respected financial planning journal (http://www.financial-planning.com/) by Stephen Savage entitled "Anatomy of a Recovery" highlighted the recovery times if, mind you, you do not give up and move assets from stocks at these low values to other fixed income areas. Recovery times are much longer if you "bail".
He states, and I agree, "...typical of all downturns: the sense of fear...magnifies perceptions of risk and causes stock prices to discount more than fundamentals would dictate..."
Here is some perspective:
In 1968-1970 the stock market took 18 months to lose 36%. It recovered that in less than one year.
In 1973-1974 the stock market took 21 months to lose 48%. It recovered in just over 4 years - quite a bit longer but the recovery did come.
In 1987 the stock market took 4 months to lose almost 34% (where we are as of October 9th as I write this and that took 12 months to lose this amount). In 1987, that 34% loss was recovered in 1 and 1/2 years.
In 2000-2002 the stock market lost 49% over a very long 30 months (almost 3 years). This recovery also took the longest: 51 months to recover by December 2006.
HISTORY LESSON: recovery does occur (that is, historically, of-course). Smile.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.