I'm sure that many of you are decrying the losses in your 401(k) and are hearing many others crying about the losses they have had in their investments with many people saying they've had 40% hits. Well maybe that is true if you just bought all of your investments in the last part of 2007 or first part of 2008.
Unfortunately most people have the historical memory of a gnat. If you have been putting money into your retirement over a long period of time that is probably not true.
If you have been investing over the last 10 years your basis should be (using the DJIA) around 10000. In fact during the period of 1999-2002 and 2004-2006 it has hovered in the 10000 plus or minus range. 2006 was a year that saw the beginning of the big rise that has just ended with it beginning in the range of 10000 and ending the year at 12500. So with the market now in the low 9000's you average paper loss isn't that much
And remember there was a big drop in 2003-2004 when it was trading in the 8000 plus/minus range. So if you did any buying then, those investments really haven't lost much at all.
Finally it is helpful to note that during the period from 1991 to 1999 the DJIA rose from the 2000 range to the 10000 range. So if you started your investing during that period, you certainly have not lost money.
So in spite of all the trauma over the last few months (and not knowing what the future may bring) the current value is not that far out of line with what has been the experience over the last decade.
Don't get carried away with everyone whose only understanding of history is what happened last week.
2 comments:
damn it - I DID buy at the end of 2007. Re-tard-ed. :( Not everything, but enough.
Excellent post!! I'm a bit surprised that the DJIA average cost basis would be so close to 10,000, but then I have a gnat like brain. Buy and hold. Slow and steady. That's what wins the race!!
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