July US Stock Market Performance

Last Updated Jul 31, 2011 10:59 PM EDT

In the face of the US debt default, the US stock market declined again in July, making it the third month in a row of declines. The 2.2 percent loss of the US stock market as measured by the total return of the Wilshire 5000 came in the last week, losing 4.1 percent, while Congress continued its partisan approach. Stocks lost ground each day last week as the clock ticked toward default.

Though this was the third straight month of stock market losses, each month's loss was relatively small. The total three month loss was 5.1 percent. According to Wilshire Associates, the last three month losing streak occurred from September to November of 2008, as markets plummeted.

My thoughts on the future

If I had been asked a year ago what I thought would be the outcome of Congress playing Russian Roulette with our sacred credit rating, I would have guessed that the market losses would be more along the lines of 20 percent. That's why I don't act on my guesses, as they would surely lead me to do the wrong things.

The truth is that the US stock market is only 6.8 percent from its October 9, 2007 all-time high, and a full 118.2 percent above the March 9, 2009 market bottom. And while I don't know how the market will perform going forward, I am encouraged by a Wall Street Journal headline on July 30 reading "For Investors, Cash is King." It observed that the movement of money was "akin to that during the peak of the 2008 financial crisis." Of course, King Cash missed out on the great recovery then.

Investing is a long-term proposition. I can only hope that I'm not still blogging about the impact of the US default by the middle of the week.

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    Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.