I’m happy to report that my current annualized yield on my investments is +9.99% when the Dow hasn’t even gone back to the break even point this year. It wasn’t long ago (January 16th, 2008 to be exact) when my annualized yield on my investment was -99.79%!
I know it sounds like my whole investment was pretty much gone, but the reality of why it was almost at -100% was that I was down about 5% since January 1st and it was extrapolated for the whole year. Had the performance of my investment portfolio stayed that bad all through the year, I would’ve wiped out all my savings!
However, this didn’t happen and I truly believed that it wouldn’t despite the fact that news of a possible recession, the housing crisis, and high gas prices were all over the place. I wasn’t scared and certainly never sold all my stock holdings to hide in saving accounts. I believe because the long term trend of the stock market is always up. I was also confident that the companies of the stocks I picked were good companies that had real earnings power and can weather any short to mid term economic storm.
As a result, I kept investing and bought more stocks when everyone else was madly trying to get out of the equity market. I made a few mistakes like selling a few stocks when it was at its lowest for the year, but the fact that I kept investing has helped me achieve the market beating returns this year so far.
I’m no expert in investing, but I know that if I keep trusting my research and has a discipline approach that takes the emotions out of the equation, I will come out ahead in the long run.
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{ 7 comments… read them below or add one }
I know it’s an overused quote, but Warren Buffett’s contrarian advice, “Be fearful when others are greedy, and greedy when others are fearful” definitely was relevant during the first months of 2008. I also continued buy stocks even while my portfolio gushed red, and I’ve been rewarded by some really impressive comebacks!
Good for you. A 99.5% loss would have knocked off most people. It’s clear that you are made of sterner and sturdier stuff.
Regards
MN,
Are you picking up individual stocks or are you more of an ETF/index fund investor?
Black Hammer: Good for you
I’m sure that if we keep doing this, we will do well!
fathersez: I’m not sure if I was mentally tough or not, but it definitely worked out. I think that these experiences will certainly help my confidence and believe next time a huge correction is here.
Dividend Growth Investor: Most of my money are in individual stocks but I have the ETF that tracks the DOW and also DODFX which is a international mutual fund.
David,
Great discipline to stay invested through the beginning of this year. I believe the market will continue to be volatile throughout 2008 and test our commitment to stay invested:-)
What is it, Bears and bulls make money and pigs get slaughtered
… Seriously great job though. Way to not bank on market predictions!
I bookmarked your blog, thanks for sharing this very interesting article