Monday, August 24, 2009

Since the Market Bottomed...

A lot of investors have been caught on the sidelines since the March 9th S&P 500 bottom. Forbes details:

Caught flat-footed when U.S. equities rebounded off their March lows, many investors and asset managers prescribed a cautious strategy and waited for a correction to provide another entry point. But now it's more than five months later and the market has had only a few minor stumbles, leaving many on the sidelines with a dwindling amount of time to pretty up their portfolios by year's end.

The good news? As long as that money wasn't sitting in cash (or Treasuries), they probably did pretty well anyhow. The chart below shows returns since that March 9th date for the S&P, a number of fixed income indices, and commodities.

Source: Barclays


  1. I suppose it depends on what stocks retail "investors" bought. As you mentioned most were risk averse in the Nov-Apr timeframe. I would surmise that many retail buyers opted for the safer, dividend paying companies, while hedge fund managers and prop desks likely went for the high beta banks, retailers and commodities.

    This gives a bifurcated result. Retail is probably up only 20-30% from the lows - only a minor blip in comparison to what they have lost. While the leveraged fat cats have taken the explicit gov't guarantees to heart and gambled with the highest reward bets imaginable.

  2. Ive been bullish all through this.
    We are still in the Caution phase of the investor psychology cycle:

    It remarkable how the same mistakes are made over and over.