So How You Doing?

It's funny how lying with statistics can really give you a false sense of confidence.  I have been watching various financial programs and the experts say that we are at the beginning of a new bull market and that since March, the stock market has been up over 50%.  Sounds like great news, doesn't it?  Everything is fine and dandy.  That is, until you look from a slighty different perspective.

Most people did not start investing in March 2009.  If we had started right there, sure, I would be perfectly happy with a 50% gain.  The problem is that we were investing way before then.  Therefore, we really need to start counting from the last peak of the market.

In October 2007, both the S&P500 and the Dow Jones peaked.  For simplicity purposes, I will only use the S&P500 since it covers a broader range of stocks.  Now, the S&P500 peaked at 1562.  It then plunged to a low of 676 in March 2009, and since then has rebounded to 1044.  Therefore, while the S&P500 has increased by 54% since March, the market is still down 33% from its October 2007 peak.  From up 54% to down 33%, that is a huge swing and one that the media is reluctant to tell you.

Now, a more important question to you, is how is your portfolio performing? If you did nothing, either by putting your head in the sand or clutching to the "buy and hold" methodology, it is most likely that your portfolio is still down 30% or so, shadowing the performance of the S&P500.

However, if you had implemented some of those tips I had in the essays I had written during the start of this economic crisis, chances are probably doing better than the market.  You may not be even yet, but you are probably down somewhere in the 15% range.

Now, not to brag, but to provide perspective, this week I reached break even.  My portfolio reached its October 2007 value for the first time in nearly two years.  Instead of continuing to struggle with trying to recover what I lost, I can now move forward.  It is important to note that I did not have some miracle plan or magic bullet for recovering my losses.  I used what I have learned about finances over the last five years to make some key adjustments such that the crisis was just a glancing blow, not a knockout punch.  Hopefully, you have also learned and have made some changes as well, instead of sticking with the status quo.

So, two years into this economic crisis, how are you doing?