Insightful Investing Update March 2009
Not to be outdone by worst January ever, February turned out to be even worse for the stock market. As we move in to the final month of the first quarter of 2009, we have reached levels in the stock market that have not been seen since 1997. That in itself is enough to remind all that “Buy and Hold” is an investment philosophy for the past. As we have been saying for the last couple of months, we are at a point where it makes sense to SLOWLY start getting back into the stock market, especially if you have taken all of your money off the table. We are comfortable moving about half way towards the equity allocation we have suggested for our portfolios. Keep in mind, that even these allocations to stocks are considerably lower that what we would recommend for a strong economy.
Real Estate funds continue to lead the headlines, once again the biggest losers falling an amazing -20% for the month, and almost -60% for the past year, results that are even worse than the highly volatile Emerging Markets. There really was no place to hide this month, as even bonds lost a little in February. The only funds that were able to pick up any ground were those that are hedged or are able to go short, there by making money while the stock market fell. While you would not exactly say “Cash is King” right now, a 1% annualized return is a lot better than the alternative over the past year and a half.
Keep in mind, that the stock market will eventually recover, so be ready to move back in. Just do not be in a hurry. You will have plenty of time.
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