Investment Basics

In the last week I have read a number of articles asking the question: "Has the Bull Market Returned?".

The market ended today for the fourth week in a row where the Dow Jones Industrial average has increased. The Dow is now above 8,000. This is a longways from the high point back in October of 2007 when it was over 14,000. The Dow is still down 43% from its peak.

The much broader measure of the Standard and Poors 500 index is down 46% from its peak.

I can only hope that we are on the upswing. The stock market is a leading indicator of the economy and normally leads the economy out a recession by about 6 months. If this is the case it is pretty close to what many of the prognosticators are saying about the recession ending by the end of this year. I have posted a couple articles on my website discussing the stock market recovery. I post articles written by others every few days that I find of interest and you might also.

It is difficult to comprehend why the stock market has increased for 4 consecutive weeks when news is so negative including today's employment figures with an additional 663,000 people on the unemployment rolls in March with the total unemployment at 8.5%. Employment is a laggard of the economy and normally does not begin recovering until 5 months after the recession is over. I guess the stock market has already factored in these lower than expected numbers. A few months ago there was an expectation the unemployment numbers would reach 10%.

This severe recession has had a major impact on the individual investor watching their balances decline dramatically. In many situations many investors have cut and run from the market which in the long run is probably not the best move. No one knows for sure (timers don't know how to time the market) when the markets will turn around and when the markets turn historically there has been a rapid upticks in the averages. Are we in the middle of one now or this a false bull? I don't know but because I am not a timer my money is invested for the long run and I am ready when market decides to turn for the better.

My investment philosophy is very basic in being broadly diversified in different asset classes that are made up of index funds. There is no active managed funds in the portfolios that I would recommend. Over the long run active management because of their higher fees don't perform as well as index funds so why not just take what the market provides.

My investment company of choice is Vanguard because they are the lowest cost provider of investments and have the largest number of index funds to choose from. This week Vanguard introduced a 5 part series on investing titled "Simple Strategies for Successful Investing". I think it is very helpful and gets to the basics of investing. Here is the link to the video series. I hope you find it informative and helps with your investment educator and investment decisions during these turbulent times.

If you have questions about investing let me know.