A Time to Buy, and a Time to Sell…

The Book of Ecclesiastes elegantly speaks of life in terms of cycles. “A time to plant, a time to reap … a time of war, a time of peace…”. The stock market also moves in cycles. We have seen dramatic up moves, and gut-wrenching drops. The question I am getting is: are we at the bottom? Is it time to back up the truck and load up on stocks? The answer is … I don’t know. What I do believe, though, is that America is one of the preeminent economies in the world, and we will still be buying products from Kraft, Kellogg’s and Dell from retailers like WalMart, Amazon and BestBuy five years from now. Further, in 5 years, we will all probably look back and wish we had invested more with a Dow at under 9000.

If we are at, or near, the bottom, market history is very telling. Looking back at the last 3 bear markets, the subsequent 5 calendar years, after the bottom, have averaged a return of 14.5%. Well over the long-term (100 year) average market return of 9.6%. That additional 4.9% would earn an additional $9600 on a typical $25,000 retirement account just over those 5 years! (List of Financial Calculators.) So, while I can’t tell you we are at a bottom, I would point out another couplet from Ecclesiastes: “A time to gain, a time to lose…”. Many of us have already felt the pain of the losses, but let’s not miss out on the subsequent gains!