This bear market has been brutal, but those of us who have continued to invest through the worst of the market have been seeing some pretty impressive gains. I am glad to report that we fall into this category.
Yesterday I did my usual Quicken review of our portfolio and was happy do discover that my 401K is now at break even point. I joined my company in March 2008 and joined the 401K plan in May (I still maxed out my contributions for the year, don't worry). While my early stock investments in the plan are still down about thirty percent, the positions that have been purchased since November are all now above water. The combined result is break even.
I have written repeatedly about the fact that we have been putting more money into the stock market on a monthly basis throughout the crisis. My review of the portfolio revealed, for example, that a position we purchased in Vanguard's Total International Stock Index fund in March is now 38% above it's purchase price. Naturally, our portfolio as a whole is still very much down and will likely take years to recover, however the stock positions that we have been buying through the worst of the downturn are helping our overall portfolio to recover much faster.
Incidentally, I have now stopped our monthly mutual fund purchases (with the exception of my 401K contributions). For one, I feel that the stock market has been rising too quickly over the past couple of months. I don't think it's as huge a bargain as it was just a few months ago. I do believe that we are going into a recovery and that the stock market rally is for real, however I think that the current rally may be a bit over done in the short term. If this sounds a bit like market timing, you may be on to something, but the current aggressive skywards move makes me really nervous and I am going with my gut. I prefer to buy stocks on the way down... Another reason for my halting our new purchases is that I would like to keep a larger cash position on hand. I think we may be getting to the point where buying a house is something we would want to entertain, and if that is the case, I would like to have the cash to move forward while limiting our dependence on the short term performance of the stock market.
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