Happy Anniversary!

Happy Anniversary.  Today is the second anniversary of the low-point in the S&P 500 after an eighteen month fall of 56% of it's value.

That was the worst eighteen months of my experience as a financial professional and changed many of our lives.  Like many boomers I was looking ahead at the retirement for which I'd been planning, although it was still five to seven years in the future.  I was looking at my retirement nest egg with satisfaction and counting some chickens before they hatched.  My, how things can change.

I was prudently invested and well diversified, as I hope all of you are, so my portfolio didn't take as bad a hit as the stock market.  Even so, it lost about 30% of its market value.  Ouch.

Based upon averages, that's about four years worth of gains that would have to be replaced.  If I'd been thirty or forty years old, it would have been a relatively temporary set-back.  I'd have had plenty of time to make up for the losses.  At age sixty, not so much.  That's why it was so important to catch the wave of improved returns that started two years ago and ride it back to the future I wanted.

During that eighteen month fall from the peak, I cautioned my investment clients, "Don't panic."  Values were falling but they would return.  The analogy I made was that of a round-trip airplane ticket.  We had all paid dearly for a very expensive round-trip ticket and it was imperative that we not miss the return flight.  That meant we had to stay invested.  Although we had to be on the plane, we didn't necessarily need to be in the same seat.  That meant we should upgrade to better, more appropriate investments for the return ride if possible.  We should look to improve quality and adjust allocations where it was appropriate--but we should stay invested.

Of all my clients at that time (approx. 200), all but two stayed invested and made it home.  I did, too, as my portfolio, now, is right back to where it was after taking a wild, two-year adventure.

A psychiatrist who was a sales trainer and coach once told me that I should think of my job as if I were a doctor.  He said it wasn't enough to diagnose and prescribe treatment--I had to convince my patient to take the treatment.

I've moved on to my own consulting and investment business, now, but I still think about the two families who missed the flight home.  They panicked and directed me to sell all their securities at the very bottom of the market.  I had failed to convince them to take the treatment.  I hope they are well.

Since March 9, 2009, the S&P 500 has gone up 95% but it didn't make that gain in a straight line.  There have been many ups and downs, as the past few weeks have demonstrated.  There will be more ups and downs, I assure you, but it doesn't change this fundamental truth of investing--no one knows when the ups will change to downs or vice versa.

The moral of the story is, be prudently invested appropriate for your objectives, stay well diversified but stay invested.  The treatment for ailing investors is Time In The Market, not Market Timing.