Steadfast FinancesPost Financial Crisis Retracements: Buy & Hold Investors Making Their Money Back

Post Financial Crisis Retracements: Buy & Hold Investors Making Their Money Back

Filed in ETFs , Index Funds , Investing 101 1 comments

In 2007, the financial crisis and impending stock market crash was nothing but a bearish prognostication. To the chagrin of many, once the stock market was in total free fall, the Feds stepped in with tons upon tons of money to prop up the market, sell billions of dollars in USTs on a weekly basis, changed accounting regulations to hide billions in bad paper, etc.

However, the new normal of American high finance did have one seemingly positive effect: the stock market went zoom zoom. Since the bottom, most stock market indices (and the index funds/ETFs that track them), have by in large made up the majority of their losses from the 2007 pre-financial crisis highs. In other words, had you held on to your investments, you’ve made a big chunk of your money back and maybe even turned a profit!

Commonly Held Index Retracements

S&P 500 Index: down ~25% from 2007 highs.

Nasdaq Index – almost breaking even.

Dow Jones Index: down ~25% from 2007 highs.

Russell 2000: Breaking Even.

S&P Midcap Index: gained ~10% from 2007 highs

Naturally, these examples assumes that you – the investor – failed to make any investments after the peak of the market in 2007 and didn’t make a single investment into your retirement accounts or other taxable index fund/ETF account. If you did continue to dollar cost average into the market from 2008 to 2011, chances are you are currently happy with your decision to stay the course.

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Posted by CJ   @   11 February 2011 1 comments
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Feb 11, 2011
2:49 pm
#1 Mike :

As John Bogle, former head of Vanguard says, timing the market is impossible. I added to all of my stock/ETF positions as they fell, and watched them recover losses and turn a very nice profit. I watch trading costs and expense ratios carefully, and use TD Ameritrade’s no commission ETF platform to dollar cost average into many Vanguard ETF’s. As long as your time horizon is sufficient, history shows no strategy beats buy and hold. You will lose more by being out of the market in most time periods.

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