Remember our motto for 2009: Let’s look forward, not back!
January 2009 recorded the worst monthly loss for the Dow Jones Industrial Average and the Standard & Poor's 500 Index of any January in the history of either stock market index. The primary culprit was the deepening banking crisis, which is global in nature and drove international stocks to bigger losses than US stocks for the month.
Reactions from our clients to the continuing financial crises represent the full scope of human emotions. Many are coping well; others are having a harder time. For all of our clients, we want you to know that we feel your pain. To say that these are unprecedented times is an understatement, despite the fact that there have been serious financial crises many times in history. The good news is that the problems of the past will be fixed and we will emerge with an economy that has been purged of excessive debt and we will have a better savings rate that will contribute to stronger economic growth in the long run.
We re-iterate our recommendations from our October 2008 "Fun Facts…" The best thing to do is stick to a disciplined investment strategy. We realize this is easy to say and hard to do. If the pain and discomfort or worries are too great, we can raise cash and protect principal in the short-run. That introduces the significant challenge of when to get back in, but some clients have indicated they are willing to miss the early stages of a recovery.
We remain confident and optimistic that the worst is behind us and there will be a stock market and economic recovery, albeit not likely until late 2009 or 2010. The next few months may continue to be very difficult. Our economic system does work, but it takes time for cycles to evolve. Patience is the greatest tool of the successful investor.
One administrative note: Congress changed the deadline for brokerage firms to send Form 1099’s and other tax information from January 31 to February 15th, so you will be receiving tax reports later this year. The hope is that they will be less likely to be revised.
As always, your trust and confidence are important to us and we appreciate the opportunity to serve you! Please contact us with any questions you have.
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