Déjà vu all over again?

Many investors who kept their portfolios in stocks throughout the financial collapse of 2008 seem to have recovered by now.

It looks as though it all worked out in the end – as long as you had the time.  The problem is that some were not so fortunate.   I can think of several people right off the top who were planning retirement in 2008 but because of the losses in their retirement plans, are still working today.  One person in particular was my neighbor who was planning on retiring when she reached 30 years of service at her company in Worcester.  She now has 37 years of service, has downsized to a new house that will shorten her commute and no plans to retire.  Her current plan of working till the end might seem a little extreme and perhaps is, but it demonstrates the extent of the trauma created by the economic collapse of 2008.

Today’s market reminds me, in some ways, of another bull market moment in 1999 when the market hit new highs.  That run culminated with what amounted to be a great opportunity to re-construct investment portfolios to best preserve the gains of the prior years.  Some did and some did not.  My conversations in 2003 with those who did not were laden with misgivings and regret.

Where do we stand today?  Could this be a moment when we should apply the lessons of history?  Or . . . is it different this time?  The recent volatility in the market suggests uncertainty.  One thing is for certain though – volatility hurts returns.  This is a great time to take a close, hard look at your investments relative to your retirement needs.

 

Dwight Davenport

Principal, Vodia Capital, LLC