3rd Quarter Returns

Investors receiving their 3rd quarter 401(k), IRA, and brokerage statements this month should have breathed a sigh of relief. Higher balances and improved returns have recovered most accounts nicely since the end of June. Those who may be disappointed are the ones who got out of stocks completely in March or April, only to see the stock market recover with returns over 50% since that time. The lesson? You can't out smart the stock market. Analysts and bears were telling people to get out of the market as the Dow Jones hit 7500, 8500, and 9500, only to watch in dismay as the index passed through 10,000 recently and some now predict it to hit 10,500 by year end. Determine the right mix of stocks and bonds that you should have in your portfolio based on your age, objectives, and experience, but everyone should have some exposure to stocks in their long term retirement accounts. Cash may be king, but not when it pays less than 2 or 3%.