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Your portfolio: Better off now than 4 years ago?

(MoneyWatch) When you go to the polls next week, the presidential candidates want you to ask yourself if you are better off than you were 4 years ago. (They don't agree on the answer.) I've got another question: "Is your portfolio better off than it was four years ago?" The answer has nothing to do with Democrats or Republicans, and everything to do with how you chose to allocate your savings. Let me take you back to October 2008 and show you some financial headlines:

It was a scary time to be an investor. So painful, in fact, that I remember the dirty political presidential ads I normally detest were a welcome distraction from watching my portfolio evaporate.

But how much better off are you today than you were 4 years ago? Since Halloween, 2008, the US stock market is up 62.4 percent. If you had simply owned the Vanguard Total Stock Market Index ETF (VTI), that would have been your return. Consider the fund's return from these other key dates:

  • Up 130.1 percent from the market bottom on March 9, 2009
  • Up 9.3 percent from the 2007 year-end close
  • Up 2.6 percent from the all-time high close on October 9, 2007

The last point might take you by surprise. A buy-and-hold index-fund investor is now wealthier than he was at the market's pinnacle five years ago. If you didn't get these returns, then there are probably two culprits -- and they are not named Romney, Obama (or Bush). They are: expenses and emotions. So-called "active" money managers, who pick stocks for mutual funds, claim that index funds don't work when stocks are falling, so they charge you high expenses to outsmart the market. On average, they do worse in both down markets and good markets.

Or perhaps you panicked and pulled the plug on stocks when they tanked, believing the hype that stocks were dead and cash is king.

After all we've been through, it's been a great 4 years for the stock market. In hindsight, it wasn't that the economy roared back, rather it was that the economy wasn't doing nearly as badly as investors believed. I haven't a clue as to who should get the credit -- save that opinion for the voting booth.

No matter who spends the next 4 years in the White House, it's unlikely stocks will clock such great returns. Whatever it delivers, make sure you get your fair share by minimizing expenses and emotions and maximizing diversification and discipline.