Posted By eddie on February 6, 2010
Today, I would like to share some information and an opinion or two.
The information comes via BTN Research (Behind the Numbers is a financial/political blog, dispatched by staff writers at the Washington Post). The opinions come from yours truly.
- The S&P 500 was down 3.6% (total return) in January 2010. The loss is the 3rd consecutive year in which the stock index has started with a decline in January. The S&P 500 was down 6.0% in January 2008, and then lost 8.4% in January 2009.
- The S&P 500 has produced a negative total return for each of the last three (3) Februarys. The stock index was down 2.0% in February 2007, down 3.2% in February 2008, and then lost 10.6% in February 2009. February’s average performance over the last 20 years (1990-2009) is a loss of ½ of 1 percent (-0.5%), ranking February as the 10th best month over the two-decade period.
- The S&P 500 has gained at least 25% (total return) eight (8) times in the last 25 years (1985-2009), including last year (the stock index gained 26.5% in 2009). In the calendar year following the 7 previous “25% and up” years, the S&P 500 was up 6 out of 7 years, gaining an average of 14.8% annually.
Given the substantial recovery we witnessed in the last half of 2009, it should surprise no one that the first month of 2010 was a slight correction.
If February 2010 continues the recent annual trend, we should expect another slight correction.
Again, if history proves to repeat itself, we can expect six (6) of the next seven (7) years to be very meaningful in our pursuit of wealth building and in recapturing recently eroded retirement savings. Experience and optimism lead me to expect that at least four of those positive years to come before the next major downturn.
NOW might very well be the time to get as much of your hard-earned money invested into those good mutual fund accounts as possible!