So far, this has been one of the most severely destructive bear markets in history. Almost no asset class has been spared. Stocks, commodities, housing, bonds have been battered. All the famous investors have been slaughtered — Buffett, Pickens, Icahn, Adelson. Of the 500 stocks in the S&P 500, only 13 are up for the year. The Legg Mason Value Fund, which boasts the longest streak of beating the S&P 500, is down over 65% this year, the third year that the fund has under performed the S&P. According to Investor’s Business Daily’sMutual Fund Index, the average growth fund is now down for the year around 44%. My own guesstimate is that the average US investor has lost over 50% of his or her assets so far this year.
Looking at these numbers, the statement at the end of my 403-B summary doesn’t look so bad! Yet somehow that doesn’t make me feel good . . . .
” Personal Rate of Return from 01/01/2008 to 11/26/2008 is -37.4% ”
Well, wait’ll next year!
Bruce Robison
That’s a fair description of much of my own portfolio. That said a few funds have limited the damage. In times like this highly diversified funds (meaning not just different sectors of stocks, but different asset classes) have generally held up better than than the S&P;500.
For those looking for a place to park some money with relatively low downside risks I like the ultra-diversified Permanent Portfolio Fund ([url=http://moneycentral.msn.com/detail/stock_quote?Symbol=PRPFX]PRPFX[/url]). Although it is down this year (first time since 1994) it was outperforming the S&P;500 by about 24 points the last time I looked. Its a weird little fund that was the brainchild of the late libertarian economist and perennial presidential candidate, Harry Browne. He envisioned an all weather portfolio composed in equal measure (25%) of four asset classes, equities, bonds, cash, and gold/silver.
The resulting 5 star mutual fund is a bit more diversified (6 asset classes) and has a good track record in rough times. Though during periods of relative economic prosperity (minimal inflation, low unemployment and a bull market on Wall St.) it has historically underperformed, doing little more than edging the return rate of Treasuries.
But this is a great sleep at night fund. You are not gonna get rich here, but you are likely to get a modest to descent return from it most years. And more importantly, your chances of taking a crushing hit are pretty slim. Further, if inflation strikes (which I think is likely in the next few years given how fast we are printing money) the combined 35% of this fund that is in gold/silver and Swiss Franc bonds should really make this fund attractive.
Not for those looking to make a killing in the market. But anyone who feels the need for a little diversification with an eye towards capital preservation could do a lot worse.
Under the mercy,
[url=http://ad-orientem.blogspot.com/]John[/url]
An [url=http://www.youtube.com/watch?v=Gj4pUphDitA]Orthodox [/url] Christian
For long-term investors, I still favor Vanguard’s Total Stock Market Index Fund and Tax-Managed Growth & Income Fund.
Ad Orientem,
Just curious as to where you go to church. We attend St. Nicholas OCA in D.C. It’s a 75 mile trip one way…..but well worth it. The Holy Spirit is there.
As to the financial mess….I think I’m down about 40%, but I pretty much stay in equities. I do have a few bonds that furnish some much needed cash.
Christ is in our midst!
Barry
Re # 4
Now Orthodox,
I attend St. Mary Magdalene (also OCA) in Merced CA. It’s a mission parish which we are blessed to have here with an outstanding priest. We are a small mission and have had some pretty tough financial struggles of late. But we are getting by, if only barely.
Under the mercy,
[url=http://ad-orientem.blogspot.com/]John[/url]
An [url=http://www.youtube.com/watch?v=Gj4pUphDitA]Orthodox [/url] Christian
Kendall: Yes, the market has plummeted. But history tells us, it will come back, and rise even higher. Indeed, look at the last week. The market has rebounded. When it turns around, as every other bear market has (except the Depression, whose market was crippled with raised taxes, and other New Deal stuff), it will bounce back fast. On top of that little bit of encouragement, the 50% decrease in gas prices since July is equivalent to a $600 BILLION stimulus package. Hang in there!!!