Do these two numbers mean anything to you — 1257.60 and 1257.64? Are they a source of panic, stress, reassurance, or maybe comfort? For me, it was a source of amazement … and somewhat comical.
It was not just the numbers themselves, but what had happened between those two numbers that brought on my amazement and retrospective humor. You see, many times in life (yes, I am about to philosophize), an event occurs that may seem — at the time — to be of great importance.
For example, image back to your first dating experience (I know it may be painful, but work with me) in Junior High or High School when your boyfriend/girlfriend that you believed you’d be with forever decided that it was time to end it. Life now had just lost meaning to you. You may have thought to yourself, why go on, it can’t get any better? And those feelings mentioned above came crashing in on you.
Yet, when viewed from a distance or more accurately from a time prospective … it really was not that big of a deal. A non-event. You had not changed. Some may even look back in embarrassment at how you felt, or more importantly, how you acted — knowing now what you didn’t back then.
Well, those two numbers were — believe it or not — the last trading day in 2010 and the last trading day in 2011 (as pointed out to me by Nick Murray’s Newsletter)*. Hence the Standard and Poor’s (S&P) 500 went virtually nowhere for the calendar year of 2011, or as close as it gets. Knowing this new found fact, let us revisit my question of emotional sources:
During said timeframe between those two figures, investors were able to witness a sharp move on the upside for the first few months. Then the debt level in the United States became an issue — imagine that — and one of the rating agencies decided to down grade the credit rating of the U.S. Treasury. Next, came the re-emergence of Greece Insolvency (wow … that’s a new one), a concern with future U.S. and global growth rates, and a resulting drop in various markets. Emotion 1 and 2 … check. Toward the end of the year, corporate profitability improved, unemployment seemed to edge downward, and the consumer confidence index became stronger. Emotion 3 and 4 … check.
As you realized-in time (your first boyfriend/girlfriend breakup), looking back on last year’s investment market … how did you act? Where you embarrassed by how your feelings made you act or react? You see, the amazement for me was that the numbers were able to come so close to a virtual push for the S&P 500 for calendar year 2011. But what is comical about those two figures is how investors (with the financial media’s help) continued to believe that life had lost all its meaning in regards to their financial well being. It couldn’t get any better… just like they were back in High School.
And you guessed it? It was a non-event … the markets had not changed. So, knowing now what you didn’t back then — the beginning of 2010 — my hope is investors have learned that as bad as it may seem at the moment, time once again usually proves otherwise.
Past performance is no guarantee of future results.
This article was written by Lou Melone, managing partner, with Budd, Melone & Company in Auburn Hills, Mich. He can be reached at 248-499-8704.
Posted date on Dbusiness.com- Article XV, Issue II
*Nick Murray Interactive February 2012
Wells Fargo Advisors Financial Network did not assist in the preparation of this article, and its accuracy and completeness are not guaranteed. The opinions expressed in this article are those of the author and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy.
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