Two Years after February 2009

February 2009 turned out to be the low point in the most recent economic downturn.  Last year, we blogged about where we were one year after the market low (click here for the March 31, 2010 blog entry).  With February 2011 return numbers now behind us, let us share with you where we are two years after the February 2009 bottom.  As a refresher, the headline on USA Today, dated February 27, 2009 read, “Dow Posts Sixth Straight Monthly Loss, Drops 11.7% in February”…the second worst monthly decline since 1926.

Fast forward two years since February 2009 and the S&P [1] secured the best two year change to the upside after a major market decline.  The S&P 500 is up 88.3% from March 2009 through February 2011.  While the S&P 500 sits about 9% away from its high set in October 2007, it has come a long way.  The stock market rewarded investors in the two years since February 2009 with outsized returns to compensate for investment risk taken and experienced.  Below is a chart showing declines of greater than 29% in the S&P 500 since 1926 and their subsequent one and two year performances thereafter:

Since we don’t know what the future holds, now is a good time to review your investment and Wealth Management Plan. Please call the office at 940.591.9007 or email Dave Ragan at dragan@grunden.com to set up a client review or get a second opinion on your existing portfolio from another firm.  The USA Today headline on February 27, 2009 didn’t leave much room for optimism yet here we are two years later and the S&P is up 88.3%. Intuitively, considering all the global issues we have faced over the last two years, that makes no sense at all; however a solid investment plan based on your unique personal circumstances will help guide you through even the toughest of times. Contact Grunden Financial Advisory, Inc. at 940.591.9007.

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Disclosure: Every investor’s situation is different and investment decisions are best made within the context of a financial or investment plan.  Consult your professional advisor for additional details.  This article reflects our opinion only and not intended for financial advice.

[1] The S&P 500 is an index of 500 widely held stocks, weighted by the market capitalization of each company.  Because these companies are chosen by Standard and Poor's based on their market size, liquidity, and industry classification, the S&P 500 is considered an unmanaged proxy for the stock market as a whole.  The returns for each reporting period are the growth (or loss) in value from the start of the first day of that period to the close of the last day.  This index also includes reinvestment of dividends.  Data is provided by Dimensional Fund Advisors (www.dfa.us.com).

[2] March 2009 through February 2010

[3] March 2009 through February 2011