newsletter
Recession and Recovery
May 2009
In our March newsletter we said, “We continue to be faced with an extraordinarily difficult market environment; one that is testing our patience and confidence, however, we believe there is far less downside risk in this market than there is upside potential.”, and “It may seem impossible to imagine a market rally from here, but it will happen at some point. Investors are most pessimistic at a market bottom and there’s a huge amount of cash on the sidelines which is positive.”
Little did we know at the time that we were on the verge of a huge market rally. The DOW hit 6547 in March and recently the DOW reached 8574. Is this the start of a real recovery? We don’t know yet, but if this is the beginning of a recovery, how long will it take to get back to a DOW of 14,000? Again we don’t know, but if history is any indication it will take less time than most people think.
A good example of this is a research paper that Franklin Templeton published just recently and is summarized here for your benefit. If you would like a copy of the entire piece, we have hard copies in the office. We’d be happy to send you one or next time you’re in you can pick one up.
RECESSIONS AND RECOVERIES OVER THE LAST HALF
CENTURY* Recession Start
to End April
1960 – February 1961
-14% +21% December
1969 – November 1970
-36% +26% November
1973 – March 1975
-48% +34% January
1980 – July 1980
-12% +24% July
1981 – November 1982
-27% +35% July
1990 – March 1991
-20% +27% March
2001 – November 2001
-37% +18% Current
? ?
*Calculations are based on the S&P 500 Price Return Index. Standard & Poor’s, National Bureau of Economic Research. Why Should I Invest in the Stock Market Now?. January 2009. Franklin Templeton Distributors, Inc. IBS SIDFL 01/09
As we have said before, the market is a leading indicator, so we believe the market will show substantial improvement before we start to see indications of economic improvement in the news media.
As part of our marketing efforts, we are offering a free, no
obligation review of a prospect’s investment portfolio in relation to
their objectives. So if you know of
someone who has been nervous in this market, we would be happy to meet with
them and offer our opinions and recommendations. And of course, if you have any questions
or concerns, be sure to give us a call.
Quotes made by the
late Sir John Templeton –
NOVEMBER 1978
I never ask if the
market is going to go up or down, because I don’t know, and besides it
doesn’t matter. I search
nation after nation for stocks, asking: “Where is the one that is the
lowest priced in relation to what I believe it’s
worth?”
FEBRUARY 1994
Bull markets are born
on pessimism, grow on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the
best time to buy, and the time of maximum optimism is the best time to sell.
Securities
through KMS Financial Services Inc.
520.884.7550
jpw@financial-architects.com brienne@financial-architects.com
3971 E. Paradise Falls,