Old strategy still works in new crisis

It’s nice to know that some age-old advice — “don’t panic” — still works in this financial crisis.

When stocks tumble, investors who remain calm and hold on for the bumpy ride ahead can regain their money over time. But those who panic can end up converting a paper loss into a real one.

The Vanguard Group, a major 401(k) provider, now says the typical retirement saver has more money in their account than they did before the stock market began tumbling two years ago, Associated Press reports.

Sixty percent of participants who CONTINUED TO CONTRIBUTE AND STAYED INVESTED have more money in their accounts than they had before the market decline in September 2007, AP says.

Forty percent still have lower balances. But Vanguard said most of them are less than 20 percent below their earlier peak, AP reports.

Patience truly is a virtue.

How have you fared? Any key strategy that you’d like to pass on?

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5 comments Add your comment

DW

December 4th, 2009
12:06 pm

Being a patient contrarian usually pays very well IE: Buying when everyone is selling and selling when everyone is buying

Lloyd Braun

December 5th, 2009
9:37 am

B.S. – the always-win-in-the-long-run strategy has been over sold to the masses.

Bonds, which have FAR less risk than equities, have out performed equities for the past 10 years and the PAST 20 YEARS!

That means that all those stocks you’ve had in your 401K for the past 20 years are losers! If 20 years is not “long term,” then what is?

Don’t believe the financial industry’s self-serving specious mantra.
Mazel tov (I’m good with money),
Brauny

deborahinAthens

December 6th, 2009
6:04 am

Lloyd Braun, last year bonds took a huge hit along with everything else. Bottom line, you should have stocks as well as bonds, along with some cash in a balanced portfolio. And, hate to tell you this, but it is a fact. Stocks outperform EVERYTHING, including real estate, long term. If you’re a thirty year old and you won’t be touching your 401(k) for 20-30 years, you have a long term. By adding to your portfolio when the stock market is down, you enhance the value. Don’t be so self-righteous—the investment god has a way of knocking your knees out from under you when you think you have “the secret”! Be glad of your prosperity and wish prosperity for others.

Lloyd Braun

December 6th, 2009
8:14 am

deborahinAthens,
Save your pedantic lectures for the clueless. Bonds lost 1/10th of what stock lost last year – some “huge hit”. Duh. And read this: Bonds have out-performed stocks for the past 20 YEARS. And by your admission 20 years is a long run. Duh. On a risk-adjusted basis bonds have been a far superior investment to stocks over the past 20 years – a long run, fool!

Drink some more of the finance industry’s Koolaid and look for some wide-eyed sap for one of your know-it-all moralistic lectures.

Tax Dude

December 7th, 2009
7:35 pm

This article is extremely misleading.

“The Vanguard Group, a major 401(k) provider, now says the typical retirement saver has more money in their account than they did before the stock market began tumbling two years ago, Associated Press reports”

This sounds rosy until you ask the following questions?

What is the definition of a typical retirement saver? I have never heard of this term before?

What percentage of the entire retirement accounts are owned by typical retirement savers?

How much did the typical retirement saver have in his/her 401k two years ago?

How much did the typical retirement saver contribute to his/her 401k account during this two year period.

Excluding contributions made by a typical retirement saver to his/her 401k account during the two year period what is the current value of the retirement account of a typical retirement saver?

http://www.edisonaccounting.com