In our office, we celebrated privately the passing of the four year anniversary of what would be a 13 year stock market low point.
That’s right, it has already been four years since March 9, 2009 when the S&P 500 Index closed at 676—a level last seen in the summer of 1996. As of the date of this article, the S&P 500 Index has surpassed its all-time high of 1565, which was achieved in October 2007!
Even with the backdrop of many unresolved problems, the financial markets continued strong performance in 2012. Many of the major domestic stock indexes experienced returns in excess of 10% for the year, with the S&P 500 advancing by 16%.
There are a number of indexes that attempt to measure the performance of the financial markets and serve as a gauge of economic activity. The following are descriptions of several of the most common indexes: (more…)
In our office, we talk quite a bit about risk. Financial risk, and more importantly, identifying strategies to help our clients mitigate or manage those risks is a very real and important component of the financial planning process.
Vanguard has an interactive tool on their website that allows visitors to compare the results when attempting to time the market based on certain investment rules. For example, if you exit the market after a 10% decline and re-enter the market after it appreciates by 5%, how would your results compare to simply owning the market (S&P 500 index) for the entire period? The tool can provide outcomes that span over the last 22 years.
I sampled this tool for quite a while, attempting to effectively “time” the market. I have to admit that I was very surprised by the results. Here is the link to the tool if you would like to give it a try for yourself – The truth about emotion.
The financial markets have experienced continued volatility since the end of April. In fact, with stocks declining in excess of 10%, the markets have officially entered a period of “correction.” Although corrections are normal (and actually healthy for the markets), many investors may be a bit uneasy, especially with the wounds of the “Great Recession” still fresh in everyone’s mind.