Good-Bye and Good Riddance: 2008 Enters Stock Market History
by James B. Cloonan
I am not sorry to see 2008 become history.
Like most everyone else, I am hoping for a significant market upturn in 2009, but I would settle for some firmness and reduced volatility.
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Historically, the stock market is a leading indicator, and thus it should recover before the economy. But when that will occur is unknown, even though experts are making lots of predictions. Since the market tends to defy analysis, the turnaround will probably come earlier or later than generally expected.
In 2008 AAII’s Model Mutual Fund Portfolio was down 36.5%, as compared to –37.0% for the benchmark Vanguard Total Stock Market Index fund (VTSMX). While the Model Mutual Fund Portfolio came out only slightly ahead in 2008, you can see in Figures 1 and 2 and Table 1 that it continues to outperform its benchmark significantly over the long term.
I continue to believe our allocation across the objectives of our current funds is appropriate and will continue to outperform the general market over time.
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