On March 9, 2009, the stock market plunged to a 12-year closing low: 6,547. Slowly but surely, we are digging ourselves out.
With Wall Street closing yesterday at 10,552, CBSMoneywatch.com editor-at-large Jill Schlesinger said the Dow Jones Industrial Average is up over 61% over the past year.
"That is the best one-year since the Depression, the best 12 months," she said on CBS' "The Early Show" this morning, also noting that the Nasdaq is up 83%, and Standard & Poors is up 68%.
"I really want to point out one thing that's a little scary: The S&P 500 is still at the same level as 1998 - we still are 27% below where we were in 2007," Schlesinger said. "So we've made a lot of ground up, but still got a ways to go."
Schlesinger said the sectors which recovered most in the last year were business services (publishing, advertising, consulting) up +210%; media business ("thankfully for us!") up 138%; and a 155% jump in financial services - "all those taxpayer-bailed out companies, the banks, the mutual fund companies, the big insurance companies," she said. "To me that's pretty amazing."
But she acknowledged that with that gain came pain, on the backs of taxpayers.
"So it sort of stinks on one hand, but we're happy a year later that things have stabilized," she said."
Schlesinger also said the numbers bode well for the recovery of 401(k)s. According to figures provided by Fidelity, at the end of March 2009, the average 401(k) balance was $47,000; at the end of December 2009, the average was $64,000.
"Part of that has to do with us putting more money in, but that's also a sign of confidence," she said. "Part of it was market growth. Those are really good numbers. We're happy to see that trend."
Schlesinger's advice for the next year?
"Number one, look at the last year. Don't get emotional. It's never as good, or as bad, as you think it's going to be.
"And one way to guard against your emotions and not fall prey to fear, or to greed, is to take a risk assessment questionnaire. Go to your 401(k) plan provider, any mutual fund company, you take a test. It says 'How did you feel' at the bottom. 'How are you feeling now? When do you need your money?' Those questions help you create a diversified portfolio.
"You know the broken record: Everyone comes on and says, 'Diversified portfolio.' This works. By the way, in the decade of 2000 to 2009, a diversified portfolio, stocks and bonds, beat all stocks.
"So don't be a hero: Get a good night's sleep, don't panic, don't fall prey to your emotions, chill out."
For more info:
Read Jill Schlesinger's blog, The Financial Decoder, at CBSMoneywatch.com.