Record Highs

Here's the power of investing & timing, by the way: I happened to check my portfolio tonight and, knowing the market was up BIG, I was expecting BIG things!  But I was more than pleasantly surprised when I saw that my month-end balance for July 2009 was higher than my portfolio had ever been.

That means in September 2007 when the market was at its current peak, and when the DOW was sitting around 14,000, I had less money than my portfolio is worth right now, when the market is impressively within the 9,000's, but still another 2-3 years from full recovery.

Granted, we are not talking about a huge starting balance of $1,000,000, but we're not talking about a balance of ::shakes head:: $3, either.

As soon as the market tumbled, you might have heard how a lot of people were putting money into falling stocks at a discount, and this is the reason.  Once the market reached its low, which I believe it was when the DOW was at 6,500, I increased my paycheck deductions by another 2-3%, so not only was more money going in, but it was buying more at a lower price per share, and when the market recovered, the worth of each share increased.

The easy way to determine when I should buy and when I should hold off was -- well, luck played a big part, especially in not buying when the market was too high, and when the market went below my existing average cost basis (i.e. the average price of each share I have purchased), I knew that I would be getting a bigger discount than I had up until that point, so I made the most of the opportunity.

There are two schools of thought for the market recovery at this point: one, "easy & steady" and the other, "rough & rocky."  Personally, I am expecting the former but I have stated a couple times that I would not be surprised to see the market retreat this month or next month, maybe even back down to 8,500 or lower, but October through December should see another strong rally like we saw recently.

Probably not as strong as the month of July 2009, though.  That was the best single month in the market since 2002.


New for 2011 Note: the $3 joke was in reference to an old reader who had asked how much he could earn off $3 invested for 7 hours.  Not much, if you didn't know already.