The period of October 2007 through March 2009 that resulted in an over 50% drop in value of the stock market was not "unprecedented". It was the 4th decline of more than 30% in the past 35 years. 1973-1974 saw a 49% decline; 1987 saw a 33.5% decline (including one day of over 22%); and, of-course, 2000-2002 saw a 49% decline. It will happen again, too.
Many investors got out in early or late 2008 and others got out in early 2009 - maybe. But, getting out is a bit easy (let's face it, everyone was scared); however, for those who did get out, then, getting back in is the hard part.
That is why buy and hold works. You must have a long-term perspective. The markets have been quite shakey lately (3rd-4th weeks of January 2010) and, after a 65% rise from March 2009, have recently retreated about 6%. Is there more to come? Who knows? But those who have been waiting for 9 months for this retreat are now paralyzed.
Historically, a 10-20% decline after a run-up like we experienced is normal and healthy. Yes, the economy is very damaged and recovery will come slowly.
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.