Time in the Market

With very little fanfare, the stock market has roared back from the lows of March 2009. The Dow Jones Industrial Average recently crossed back over 12,000. It is now just 20% away from re-touching the high of 14,400 in October of 2007.

Some investors might point out that it has taken over three years to reach this point and that expecting a 20% return in 2011 is being highly optimistic. True.

But what a recovery we have witnessed. The Dow is up 84%. Most of my clients' portfolios are not far from where they were before the market crashed.

Many investors fled the stock market in the midst of the economic crisis. I am sure that many of these people thought would get back when things looked more stable. Well, do they look stable today? Let' see. We have massive budget deficits at every level of government, a $14 trillion national debt, unemployment that is stubbornly well above 9% and a housing market that is still deeply depressed. Several European countries are in dire financial straits. There is also major unrest in Egypt that threatens to alter the landscape of the Middle East.

I have seen numerous examples of investors who have stood on the sidelines as the market made this dramatic retracement. These people will never be able to capture those gains. They were apportioned only to those who stood in the arena with flames all around and refused to flee.

Successful long term investing has nothing to do with "timing the market." It has a lot to do with "time in the market."