Young Research & Publishing Inc.

Investment Research Since 1978

Back to Even and Then Some

By

Are you tired of the media’s nonstop market analysis yet? It’s distracting at best and harmful to your health at worst. With the Dow up 7.1% in the month of July, it’s worth noting how little ground has been picked up from mid-June of this year through the end of July. Even after climbing out of the valley of the March 2009 lows, the price of the Dow is still only worth three-quarters of its value from its October 2007 peak.

Dow Jones Industrial Average

Those taking a balanced investment approach had a much better experience. I like using the Vanguard Wellesley fund to illustrate the advantages of a balanced investment strategy, especially when talking to those in retirement. This example, like the one above, shows the fund climbing out of the valley of the March 2009 lows—but what’s different is that it’s worth quite a bit more than it was three years ago. As you can see, investors in this fund over the last three years have had a relatively smooth ride compared to the Dow, and even more importantly, they have been made whole and then some.

Vanguard Wellesley

Smoothing out the ride should be every retired investor’s goal and there are a number of ways to do this. For example, the Vanguard Wellesley fund doesn’t have any gold in it. A little bit of gold would have certainly improved the three year performance. Below is a chart of the SPDR gold ETF, GLD.

SPDR GLD ETF

The following two tabs change content below.

E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.