As the chart to the left demonstrates, returns from the equity markets have fallen sharply in recent weeks. These are the times that try investors’ souls, and put to the test anyone’s ability to stay the course and stick with an established allocation plan.

We understand this angst, but we hasten to remind our readers that the only alternative to riding out market fluctuations is to try to anticipate them; this is a perilous choice.

The chart below shows that a hypothetical $1,000 invested in the S&P 500 in January 1970 would have grown to $44,311 over the next thirty-five years (excluding investment related expenses). On the other hand, if one had attempted to time the market and had missed only the five best days out of the 12,775 days in this period, his portfolio would have grown only to $33,075, or just 75 percent of the fully invested result. It is also important to remember that our approach is not rudderless; we do not recommend that anyone take their hand off the tiller completely. By periodically rebalancing their portfolios to reflect their target allocations, investors will reduce the volatility of their holdings by selling high and buying low.

Also in This Issue:

A Snapshot of Americans’ Finances
Why Do Investors Choose High-Fee Mutual Funds Despite the Lower Returns?
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow-Jones Industrials Ranked by Yield
Asset Class Investment Vehicles