Long Term 401(k) Investing by Ron Sloy of SDH-Inc.

FOR IMMEDIATE RELEASE
Lake oswego, Oregon, United States of America (Free-Press-Release.com) August 15, 2011 -- 401(k) Participant,

In light of the recent market volatility and wide spread concern regarding global economic conditions, we wanted to reach out and share a few thoughts with you.

First and foremost, please remember that retirement plan assets are long term investments. We were able to maintain that mindset from 2007 thru 2010, and it helped produce positive year-over-year returns for our clients during that time period. Even amidst one of the worst market cycles in history. The recent downturn is minor in scope, especially when compared to what we saw in 2008, but it still doesn’t feel good. As painful and scary as it is to watch the markets do what they’ve done these last few weeks, you have to stay the course and remain focused on your long term time horizons.

Here are a couple interesting data points to consider:

1. From 1980 thru 2010, the average intra-year decline (peak to trough) was 14.3%. However, by December 31st, 24 of those 31 years finished in positive territory.

2. The average return for stocks over the last 20 years was 7.7%. The average return for bonds, over the same time period, was 6.1%. The average investor, who has difficulty staying the course and maintaining a long-term focus, averaged a return of 2.6%.

I wanted to share those two sets of statistics with you, because they go hand-in-hand and are extremely applicable to what we’re experiencing right now. The decline we’ve seen this year, from late April to this week, was just more than 17%. Slightly greater than the averages we just looked at, but barley out of the norm. If the remainder of 2011 plays out like the grand majority of years do, we will find our solid footing again and the markets will finish in positive territory.

However, and this is the most important message we can share with you at this time, those who do not stay the course and cannot remain focused on the long-term nature of these assets will become the “average investor”. People react on fear and greed, buy and sell at the wrong times, and tend to wipe out any/all of the returns they should experience (i.e. the 2.6% “average investor” returns from above).

Please take a few moments to read our Quarterly Market Outlook (attached), as well. This discusses what we saw in the first half of 2011, and where we see the markets moving as we head towards the end of the year. Corrections in the market, like we’ve seen over the last handful of weeks, are healthy long term. They present additional buying opportunities, and entry points for investors who may be sitting on the sidelines.

The S&P 500 (stock index) has moved roughly 70% from the March 2009 lows. Corporate profits have improved nearly 150% over the same timeframe. Remember, what drives the stock market in the end is corporate earnings and profits. Current events coupled with fear and greed can move us in the near term, even with significant swings, but corporate profits drive stock prices.

Please know that you can always contact our office directly, if you have any investment related questions. That’s what we’re here for. We can be reached toll free at 877-501-5757.

Remember to stay focused on the long term nature of your retirement plan account We look forward to hearing from you soon.


All the best,

Ron Sloy, CFP

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