Saturday, October 25, 2008

What Goes Up Must Come Down

Just to bring this global downturn into perspective, this chart I made (BigCharts.com) of mutual funds from the last ten years shows the size of the Nasdaq tech bubble of 2000 and the recent huge run-up and crash of the bull market with former winning high-flyers:

VGPMX (Vanguard Precious Metals)
FSEAX (Fidelity South East Asia),
VEIEX (Vanguard Emerging Markets)
FSAGX (Fidelity Select Gold)

VPMCX (Vanguard Prime Cap) has been a steady grower over the last twenty years but it has lagged since 2000 and has just been hit hard again (-34% YTD).

Even GLD (SPDR Gold Trust) (ETF) has lost some of its value, although it is up over four years.

Only shorting funds have gone up well lately, and that is definitely NOT "a good thing" for the market.



What goes up must come down.

How often do we hear that and not want to believe it!

If it sounds too good to be true, it probably is. What we know from the charts is that -- if it looks too good to be true, it probably is. The truth sometimes hurts.

I was wrong to say in my earlier post that gold could go up. I was wrong, and I apologize, because that is something that has worked for me as a hedge in the past.

The rules are changing again. This time is different. We're in uncharted territory (I seem to be using platitudes here). The time to "sell your losses" is probably past.

Hope your investments, if they've gone down as most have, are not making you morbidly upset.

Make a new plan to enjoy and to look forward to. Plans are big soft cushions in adversity -- nice and relaxing and good value for money.

Look forward. Be pro-active. Pick yourself up and run. Hey, you're alive.

Be good to your family and friends because this too shall pass.

The old adages still hold: work hard, plan ahead. Trust me. The pain will subside. It really will.

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