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The daily gyrations of the market really are starting to feel
like the new normal, aren't they? The Dow can't seem to move up or
down except 3% or 4% at a time. In fact, the average daily movement
since October 1 has been 3.6%. And even if you aren't obsessed
by each swing (and I hope you're not!) it's hard to avoid the
breathless reports offered up by journalists of every stripe.
The new normal.
The undeniable reality is that we are now in a recession, with
falling consumer demand, shrinking business investment, and the
rising unemployment that inevitably follows. How long the recession
will last and how deep it will go are hard to predict, but it's
unlikely to be among the shortest we've seen. And while stock prices
tend to begin their recovery well before the end of a recession, we
may well have to wait awhile for this one. That, however,
doesn't change the fact that it's critical to remain invested even
in the midst of a bear market. Market recoveries tend to be
dramatic. Following the last six downturns, for example, the
S&P 500 stock index soared by an average of 31% during the first
year. Most of that was usually achieved in a small handful of days.
So, as bad as the decline has felt, chances are good that we'll get
a big chunk of it back pretty quickly once the recovery finally
arrives.
And there's also good news to be had. President-elect Obama
has made it clear that the economy is going to be priority number
one in the new administration and has already been working with
Congress and the White House to take additional steps to speed the
recovery. Meanwhile, governments and central banks around the world
have been taking action to ease the current credit crunch. The early
indications are that these actions are beginning to have the desired
effect. These steps won't end our problems overnight, but they're
likely to shorten the time to recovery considerably.
At Yeske Buie, we're analyzing opportunities to rebalance
portfolios and, where appropriate, harvest losses. For your part,
finding ways to minimize withdrawals during this period will help
preserve your portfolio and maximize its participation in the
eventual recovery.
There's no question that these are difficult times, but with some
discipline and patience we can get through them together and be in
good shape to enjoy the better days to come.
Take care,
Dave
David B. Yeske, CFP®
YESKE
BUIE . . . Live
BigSM
220 Montgomery Street, Suite
994
San Francisco, CA
94104
415-956-9686
www.YeBu.com
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