Another “Why is this news” headline…..From the headline and the story you’d think people hadn’t made any money since June of 2001, you’d be wrong of course. A diversified portfolio of stocks has done great since June of 2001 as has a portfolio of stocks and bonds. Had you invested in June 2001 (the last time the Dow was at 11,000) in a diversified portfolio of stocks you would have a total return in the 75% range (a 13% annualized return). A portfolio that was 60% stock, 40% fixed income (all diversified) would have returned a total of 52% (a 9.5% annualized return). Heck, even if you invested solely in the S & P 500 you’d be up an annualized 1.45%.
The news isn’t that diversified investors did fine during what has been deemed a “bear” market, it has been that the markets haven’t moved in four years and nobody has made money – this just isn’t true.
Remember, the financial news media is not here to give you news and perspective, they are hear to sell advertising. Nothing wrong with that, but just remember that sensationalism sells better than facts. The facts remain that throughout time diversified portfolio’s have continued to hold up.
Scott Dauenhauer, CFP, MSFP