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David Callaway
March 9, 2011, 12:01 a.m. EST
View all David Callaway "º
"¹ Previous Column
Oil price surge not a recovery killer
First Take "º
NPR's Vivian Schiller is getting a raw deal
By David Callaway, MarketWatch
SAN FRANCISCO (MarketWatch) "” Turns out the Dow Jones Industrial Average didn't go to 3,000. The bank and auto-industry bailouts didn't bankrupt the country. And the investment-banking business on Wall Street didn't collapse like a house of derivatives-marked cards after Lehman Brothers imploded.
On the two-year anniversary of the start of the bull market this week, it's worthwhile for investors to pause and reflect on some of the lessons we've learned since the great financial crisis of 2008 and early 2009.
Back on March 9 two years ago, gloom was overwhelming in the markets. Buy-and-hold investing had been declared dead. With stocks down 50% or 60% in the previous 18 months, and having fallen six months in a row, many investors were convinced the markets wouldn't come back in their lifetimes.
Financial advisers Josh Brown, Chris Cordaro and Jonathan Kass recall the March 9 lows of 2009, share the lessons they learned from that day and give their predictions for the rest of 2011.
Older retirees and many investors had sold that January or February, at what we know now was precisely the wrong time to get out of the market. The pain of seeing their life's savings depleted in investment statements month after month after month had just become too great.
A relentless stream of triple-digit down days in the market contributed to the soul-destroying talk of unemployment, recession, depression and political chaos in Washington. A new president, who inherited the bailout program from his predecessor, struggled to maintain those policies "” which proved correct "” while a frustrated nation turned its ire on him.
And then, on a spring Monday of no real significance at the time, stocks bottomed out. Over the next few weeks the market would rise 20% as investors watched and argued about whether it was just another in a long line of false bottoms. It wasn't.
The painfully slow global recovery we've witnessed over the past two years, only now even starting to take hold, had been seen by the collective market at that point, even though nobody understood it at the time. That's the thing about turning points: You never see them coming.
/quotes/comstock/10w!i:dji/delayed DJIA 12,221, +6.28, +0.05% /quotes/comstock/21z!i1:in\x SPX 1,320, -1.95, -0.15% Finding bottom Bear-market lows struck March 9, 2009.
Over the coming 24 months, the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 12,221, +6.28, +0.05%) and S&P 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,320, -1.95, -0.15%) would almost double, gold would add hundreds of dollars an ounce to a new record above $1,400 an ounce. And oil, whose massive rally had highlighted most of the decade before the crisis, went into hibernation until just eight weeks ago.
All of this against a backdrop of fear and concern about soaring deficits, the fragility of the world's major banks, Iran's nuclear capabilities and intentions, and the future of the entire European single-currency project.
At the same time, we've become enthralled by the iPad, and Twitter, and all the potential that the mobile revolution brings to how we live our lives "” and, in the case of North Africa and the Middle East, how technology can effect social and political change.
The lessons for investors should not be forgotten. Buy-and-hold investment strategies did not survive for decades because they were fads. Investors who didn't sell and held on "” indeed, continued to dollar-cost average "” did quite well over the last few years.
Diversified portfolios will help capture the best market moves, gold and emerging markets in this case, while hedging against the worst, oil and blue chips during this cycle. And, most important, that the daily noise of news, opinion and protest we all live with, and which grows louder as we increasingly connect ourselves, often needs to be blocked out when making long-term or even short-term financial decisions.
Some people think anniversaries, like stock-market milestones, are just arbitrary dates and numbers that have little significance. But it's worth a moment to look up from our BlackBerrys on this one and think about how far we've come since those gloomy times two years ago. And how far we still have to go.
David Callaway is editor-in-chief of MarketWatch.
Add Comment › · Recommend · Post: Alert Email Print More David Callaway March 3, 2011 Oil price surge not a recovery killer Feb. 18, 2011 NYSE deal ends crisis-inspired protectionism Feb. 3, 2011 Complacent bulls ignore January turmoil Jan. 20, 2011 Losing the war on intolerance online Jan. 6, 2011 Boehner cries, birds drop "” yet stocks still rise Explore related topics Dow Jones Industrial Average S&P 500 Index Comments Screener About David CallawayDavid Callaway is editor-in-chief of MarketWatch, responsible for the global news coverage of 100 journalists in 12 bureaus in the U.S., Europe and Asia. A financial journalist for more than 20 years, Callaway has worked for Bloomberg News, the Boston Herald, and assorted television and cable stations as a reporter, columnist and commentator.
First Take NPR's Vivian Schiller is getting a raw dealDespite Vivian Schiller's shortcomings, she was good for NPR, writes Jon Friedman.
10:46 a.m. Today10:46 a.m. March 9, 2011
Most Popular Most readMost commented U.S. stock futures mixed on bull-market birthday How to make money in the bull market's third year President Obama tops government-pay Top 10 list The 2008 crash isn't over, only covered up Dynegy warns of possible bankruptcy The best laid plans ... U.S. stocks surge on bank-dividend hopes U.S. stock futures mixed on bull-market birthday We should slash welfare for the wealthy The 2008 crash isn't over, only covered up Find a Broker Partner Center » dcallaway's Latest Tweets"Investor lessons as bull market turns two: The gloom of March 2009 is no longer with investors, writes Davi... http://on.mktw.net/eXowUU" 12:50 a.m. EST, March 9, 2011 from dcallaway
"Oil price surge not a recovery killer: Despite the sudden climb in oil above $102 a barrel, the U.S. recove... http://on.mktw.net/gBpMUE" 12:49 a.m. EST, March 3, 2011 from dcallaway
/quotes/comstock/10w!i:dji/delayed Dow Jones Industrial Average (DJIA) /marketstate/country/US The market is open2:28:54 pm The market is closed2:28:54 pm 12,221 Change +6.28 +0.05% Volume 84.55m Real time quotes var embeddedchart70394702Chart = new EmbeddedChart('#embeddedchart70394702', NormalChartStyleNoDecimals, 190, 90, '1dy', '5mi', null, null, null, 'US:DJIA'); jQuery.data($('#embeddedchart70394702').get(0), 'embeddedchart', embeddedchart70394702Chart); Add to portfolio DJIA Find a Broker Create alert /quotes/comstock/21z!i1:in\x S&P 500 Index (SPX) /marketstate/country/US The market is open2:28:54 pm The market is closed2:28:54 pm 1,320 Change -1.95 -0.15% Volume 0.00 Real time quotes var embeddedchart124732823Chart = new EmbeddedChart('#embeddedchart124732823', NormalChartStyleNoDecimals, 190, 90, '1dy', '5mi', null, null, null, 'US:SPX'); jQuery.data($('#embeddedchart124732823').get(0), 'embeddedchart', embeddedchart124732823Chart); Add to portfolio SPX Find a Broker Create alert Featured Commentary » Next: Jonathan Burton's Life SavingsLife Savings
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Taoiseach and awe Ireland's prime-minister-to-be, Enda Kenny (shown), faces a litany of daunting tasks but is busily taking steps to solidify support, writes Jason O'Mahony. /conga/kiosk/wildcard4.html 132685 MarketWatch.com Site Index Topics Help Feedback Newsroom Roster Media Archive Premium Products Mobile Podcasts RSS MarketWatch on Facebook MarketWatch on Twitter Company Info Code of Conduct Corrections Advertising Media Kit Advertise Locally License our Content WSJ.com Barron's Online BigCharts Virtual Stock Exchange All Things Digital MarketWatch Community Financial News Online WSJ.com Small Business FINS: Finance, IT jobs, Sales jobsCopyright © 2011 MarketWatch, Inc. All rights reserved. By using this site, you agree to the Terms of Service and Privacy Policy.
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}); bio.init(); // if present, canonical link is preferred var p = '/story/investor-lessons-as-bull-market-turns-two-2011-03-09'; var cl = $('link[rel=canonical]'); if(cl != undefined && cl.length > 0) { p = $(cl).attr('href'); } var _sf_async_config={uid:17409,domain:"www.marketwatch.com",path:p}; (function(){ function loadChartbeat() { window._sf_endpt=(new Date()).getTime(); var e = document.createElement('script'); e.setAttribute('language', 'javascript'); e.setAttribute('type', 'text/javascript'); e.setAttribute('src', (("https:" == document.location.protocol) ? "https://a248.e.akamai.net/chartbeat.download.akamai.com/102508/" : "http://static.chartbeat.com/") + "js/chartbeat.js"); document.body.appendChild(e); } var oldonload = window.onload; window.onload = (typeof window.onload != 'function') ? loadChartbeat : function() { oldonload(); loadChartbeat(); }; })();Over the coming 24 months, the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 12,221, +6.28, +0.05%) and S&P 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,320, -1.95, -0.15%) would almost double, gold would add hundreds of dollars an ounce to a new record above $1,400 an ounce. And oil, whose massive rally had highlighted most of the decade before the crisis, went into hibernation until just eight weeks ago.
All of this against a backdrop of fear and concern about soaring deficits, the fragility of the world's major banks, Iran's nuclear capabilities and intentions, and the future of the entire European single-currency project.
At the same time, we've become enthralled by the iPad, and Twitter, and all the potential that the mobile revolution brings to how we live our lives "” and, in the case of North Africa and the Middle East, how technology can effect social and political change.
The lessons for investors should not be forgotten. Buy-and-hold investment strategies did not survive for decades because they were fads. Investors who didn't sell and held on "” indeed, continued to dollar-cost average "” did quite well over the last few years.
Diversified portfolios will help capture the best market moves, gold and emerging markets in this case, while hedging against the worst, oil and blue chips during this cycle. And, most important, that the daily noise of news, opinion and protest we all live with, and which grows louder as we increasingly connect ourselves, often needs to be blocked out when making long-term or even short-term financial decisions.
Some people think anniversaries, like stock-market milestones, are just arbitrary dates and numbers that have little significance. But it's worth a moment to look up from our BlackBerrys on this one and think about how far we've come since those gloomy times two years ago. And how far we still have to go.
David Callaway is editor-in-chief of MarketWatch.
David Callaway is editor-in-chief of MarketWatch, responsible for the global news coverage of 100 journalists in 12 bureaus in the U.S., Europe and Asia. A financial journalist for more than 20 years, Callaway has worked for Bloomberg News, the Boston Herald, and assorted television and cable stations as a reporter, columnist and commentator.
Despite Vivian Schiller's shortcomings, she was good for NPR, writes Jon Friedman.
10:46 a.m. Today10:46 a.m. March 9, 2011
"Investor lessons as bull market turns two: The gloom of March 2009 is no longer with investors, writes Davi... http://on.mktw.net/eXowUU" 12:50 a.m. EST, March 9, 2011 from dcallaway
"Oil price surge not a recovery killer: Despite the sudden climb in oil above $102 a barrel, the U.S. recove... http://on.mktw.net/gBpMUE" 12:49 a.m. EST, March 3, 2011 from dcallaway
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