For the year, the S&P 500 dropped 38.5 per cent, marking its worst run since a marginally higher drop of 38.6 per cent in 1937. The Dow lost 33.8 per cent, its worst annual decline since the index fell 52.7 per cent in 1931.
“It was beyond most people’s comprehension that such a thing could happen,” said Marc Pado, chief market strategist at Cantor Fitzgerald. “No one thought the short-term could be this destructive.”
The financial sector was the worst performing, down 57 per cent overall, in a year in which several institutions ended up part-owned by the state to prevent a collapse of the system.
If you can afford to buy stocks, this is probably a good time to do it.
In any event, this is [i]not[/i] the time to sell.
Irenaeus,
You are generally quite well informed on this subject. If you don’t mind, I would like to ask you for your thoughts about the following:
What do you think will happen in 2009 with regard to commercial mortgages and how do you think that will impact the market and the economy in general?
What do you think will happen in 2009 with regard to credit card defaults and how do you think that will impact the market and the economy in general?
I want very badly to stop nibbling at stocks with new contributions and transfer capital back into the market, but I am very wary of these two items. I think they are “the other shoe” that will drop this year and take the markets down a significant amount more (another 20-40% is my guess).
I would be interested in your analysis. BTW, I quite agree that now is NOT the time to sell if you are still in.
S&T;,
Just my two cents but I am not really into short term investing. Bear markets come and go. But the long term trend is up. Never put money in the stock market you might need in the next 5 years (7 if your at or near retirement). That said as long as you have a long term investment horizon you will be fine. While its hard to ignore a severe recession its worth remembering we have been here before. Worrying about what the market will tomorrow or the day after, or over the next year is a loosing game. Stick to a long term investment discipline and stop worrying about the markets short term ups and downs.
Some years ago I wrote down some basic rules for my investing discipline and I have been following them religiously since.