What recent surging stock values mean for investors
YOUNG MONEY Staff
6 September 2012
Recent surges in stocks
The blue-chip S&P 500 Index, which is frequently utilized as a means of measuring the health of equity markets, spiked 2 percent on September 6 to close at 1,432.09 at 4 p.m. in New York. In addition, the The Dow Jones Industrial Average gained 244.52 points to finish the day at 13,292.00.
"As clouds related to Europe start to drift off, there's no question that there's still juice left from here," Richard Weiss, a Mountain View, California-based senior money manager at American Century Investments, which has approximately $120 billion in assets under management, told Reuters. "That equities are up double digits year-to-date doesn't deter us from remaining overweight on them for the foreseeable future."
Stock volatility in recent years
The U.S. News and World Report opinion piece notes that although the level reached by the S&P 500 on September 6 may seem high, the index reached its zenith at 1,569 on October 9, 2007, and then plummeted to hit its record low of 677 on March 9, 2009.
Various market experts referred to the years of 2008 and 2009 as the "Lost Decade," but the opinion piece states that this dire assessment may be overblown for people who didn't hold all their assets in the S&P 500 Index.
Tips going forward
The opinion piece indicates that investors can learn various things from the volatility of the past few years. One lesson that is certainly applicable to the current situation is that maintaining discipline is crucial in a market that is on the upswing.
He noted that continued gains make investors feel overconfident in some cases, leaving them with the belief that their assets will continue to increase in value, according to the news source. This mindset resulted in a wide range of these market participants suffering substantial losses during the financial crisis.
The opinion piece encourages periodic rebalancing, based on the idea that if a person has 60 percent of his portfolio in equities and shifts in assets push that amount up to 75 percent, he should adjust and change his portfolio to be more in-line with his original strategy.
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