The Stock Market Then and Now: What a Difference Two Years Makes
On 03/09/2009, the S&P 500 closed at 676. This was the very bottom of the worst bear market in recent history. A few hours ago, on 03/09/2011, the S&P 500 closed at 1320. Yes, it’s been a bumpy ride, and yes, the market is still below it’s all time high, but… We’ve just witnessed a 95% gain over the span of 24 months. Wow.
Rewind two years. What were you doing? We were actually on vacation, and I was blissfully unaware of what was happening in the market. Sure, I knew that it was way, way, WAY down, but I’ve never been one to pay attention to – much less react to – stock market gyrations. We have a plan, and we stick to it.
We periodically review our asset allocation, and we tweak it when it needs tweaking, but we don’t react to market performance other than to rebalance our investments. The simple truth is that we don’t know what the market will do tomorrow. Or the next day. Or the day after that. Nobody does. And so we’ve formulated a plan that will (hopefully) help us reach our goals while letting us sleep at night.
Through good times and bad, we’ve stuck to our plan, and it has served us well. What about you? Did you make any major changes in the face of the growling bear? Or did you stick to your plan? Whatever you did, how has it worked out for you?
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Modified on March 14th, 2011 - 4 Comments
Filed under: Saving & Investing
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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March 10th, 2011 at 4:28 am
I stayed with stocks – but – not the same ones. On multiple occasions, I sold stocks to harvest the tax losses – something good about a down market.
I got to write the losses off against regular income – 25% and when I have capital gains – I will only pay tax at 15% – that is, unless we change the tax system.
March 10th, 2011 at 7:33 am
david: Yep, that’s the one clear mistake that we made during the downturn… We failed to harvest losses in our taxable account. This is especially handy if you can write off the losses against regular income, as you have been doing. Otherwise, you’re only deferring the capital gains taxes until a later date (unless you pass away and your heirs get a stepped up basis). Even if you’re “just” deferring capital gains taxes, however, it’s still a worthwhile exercise.
March 10th, 2011 at 8:33 am
“Rewind two years. What were you doing?” I was three days away from starting a new job with a $20K raise! We actually ‘timed’ the market perfectly in this regard…my husband’s Roth IRA was opened within a few weeks, and his account has returned 44% over the past two years.
I think we may have also increased his 401K a percentage or two that summer (I didn’t have a 401K until 2010, but we maxed my Roth in 2009).
March 13th, 2011 at 6:12 pm
Like Courtney, I was fortunate and got a great new job in 2008 with a nice raise.
Since I was making more money and I knew the market would likely rebound, I doubled my monthly savings from 10% to 20% of my net pay. This made a huge difference and I quickly recovered all of the losses and am way ahead in my portfolio now.