Minnesota voters have been constantly asked this election year if they were better off than they were 4 years ago. I made the executive decision to add one more year, and ask the same question about stock market investments.
To begin to answer this question, go to your files and pull out your September 30, 2007 brokerage firm or company 401(k) retirement plan account statements. This date was the approximate start of the last great stock market decline.
Next, compare your account balances on that statement to the account balances as of September 30, 2012. That date range is exactly five years. Over those 5 years, the S&P 500 index declined 5.64%.
In a company 401(k) retirement plan account, most f the investment growth over the last five years has come from company and employee annual contributions.
Most investors compare their stock market investment performance on a year-to-date basis. From time to time, it is imperative that you look at your investment performance over a several-year time horizon.
On average, strong stock markets last 4.8 years. We just passed the fifth anniversary of the current stock market advance, which began on October 9, 2007.
Although there is no reason to assume the average length of a bull market has any predictive value, this milestone is most certainly worth noting.
With the stock market weakening over the last few weeks, now is a great time for this investment performance comparison exercise. It is even a better time to make sure that you are only taking the level of risk that you feel most comfortable with in regard to your current stock market investments.
Ric Lager
Lager & Company, Inc.
