Yesterday the S&P500 closed down 20.0% from its all time closing high.
Click charts courtesy of Stockcharts.com to see full size images.
Correction Statistics for 07/07/08If the market goes up from here, does anyone want to bet that Bob Brinker will say the S&P500 "only" went down 19.99%, not 20%?
S&P 500 Data using Closing Prices
Date of last high: 10/09/07
Last Market High: 1,565.15
Date of last low: 07/07/08
Correction Low: 1,252.29
Decline in Points: 312.86
Decline in %: 20.0%
Using the MarketWatch Mutual Fund Analyzer, Treasury Inflation Protected Securities, or TIPS, have been the top performer this past year going up more than the stock market has gone down!
Just yesterday I added about $5,000 worth of SPY (Charts) to my explore portfolio at $125.25 a share using money raised from taking profits when the markets were higher.
I wish someone like Bob Brinker really could time the markets. Can you imagine how much more money you would have if you sold out of stocks a year ago on fear of stagflation (low economic growth and high inflation) and put the money into TIPS?
Instead of $100 in VTSMX (Total Stock Market Index Fund for Wilshire5000 Charts) turning into $83.44 you would have $100 in VIPSX (TIPS index Fund) growing to $117.34 for a difference of $33.90.
Those in the total stock market index fund, VTSMX, now need a 40.6% gain to catch up with someone who switched to TIPS a year ago!
(117.34-83.44)/83.44 x 100% = 40.6%Of course, that sort of performance with near perfect market timing is why market timing appeals to so many. Sadly, Jack Bogle, founder of Vanguard and a regular guest on Moneytalk, wrote:
The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently. Yet market timing appears to be increasingly embraced by mutual fund investors and the professional managers of fund portfolios alike.For us mere mortals who can't read the future with a crystal ball, a well diversified basked of index funds for our core portfolios, such as the ones I recommend in "Kirk Lindstrom's Investment Newsletter" are the way to go.
[John C. Bogle in Common Sense on Mutual Funds: , pg 20]
To find out how I've profited greatly from these difficult market conditions, subscribe to "Kirk Lindstrom's Investment Newsletter" today!
- Since 1/1/1999 through 6/31/08 my "explore" portfolio is up 175% while the S&P500 is only up 20% and Warren Buffett's Berkshire Hathaway is only up 71%
- Subscribe TODAY and get the July 2008 issue for FREE!