Jump Back into Stocks Immediately?

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Take a walk with me down Memory Lane:

1973: S&P down over 17%  (ouch)
1974: S&P down over 29%. (ouch again)
The bottom for the S&P was reached in October 1974.
And the bottom was reached - yet again - in December 1974.

There was no advantage to jumping 100% back in, immediately.


October 19, 1987: S&P 500 drops 20% in a single day.
October 20, 1987: S&P 500 rises 5%.  And on October 21, 1987: S&P 500 rises 10.2% (a single-day record, until 2008!)
But if you jumped in then, guessing the "market was OK"...it wasn't until the following January that you got back to even.  In fact, you were sweating - in December 1987, the market was back to where it was on October 19th. There was no advantage to jumping 100% back in, immediately.

The S&P fell 20% throughout mid 1998.  And, again, after a "bounce rally," the market slipped back and re-tested the low.  It took many more weeks and months to get back to the same levels after the bounce.

There was no advantage to jumping 100% back in, immediately.
Summer 2002: The S&P 500 dropped 22%, falling to 785 in late July, 2002.  So...was that the bottom?
After rising 21% over the next furious few weeks (to 950), the S&P 500 again fell all the way back to 785 again in October 2002.
However - in December 2002, the S&P 500 was back at 950.
But - wait!  In March 2003, it was back at 785 - again!

There was no advantage to jumping 100% back in, immediately.

Don't misunderstand, we are facing one the single BEST buying opportunities right here.

But "right here" doesn't mean "this week" or maybe even "this month."  This "opportunity" may be here for several months.

Thomas Mullooly  is the owner of Mullooly Asset Management, LLC, NJ Fee Only Investment Advisor, providing guidance for your 401k account. Mullooly Asset is a fee-only alternative to stockbrokers and financial planners.

Tom's popular email alerts help folks to reduce the risks in their portfolios. To learn how to stop making investing mistakes or if you would like a free look at your 401k account at work - or your 403b annuity, or section 457 deferred compensation plan at work, visit www.mullooly.net today!

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