From July 31, 2008 to October 31, 2008, my portfolio dropped 30% when the economy suffered the double whammy of soaring gas prices and the bank/mortgage meltdown.
I listened for months to doom and gloom forecasts, experts saying 20 plus years for a recovery, no hope scenarios. How the credit crisis was going to bring down other industries. How it was going to snowball into all industries and companies worldwide. So, I did what any sane investor does in a down market; I bought more shares. After all, “buy low, sell high” was created in just this kind of downturn. I watched as my new purchases plummeted along with the rest of my shares, now down 36% at year’s end. But I had faith. I also had three things going for me. One, nothing was actually lost until I sold the shares, two, I was young and could ride it out, and three, I didn’t own any shares in the banking, investment or car industries.
President Obama was inaugurated. Stimulus packages were enacted like sandbags along the flood channels. Banks, investment firms, car companies were thrown life jackets. And still I sank. By the end of February 2009, I was down 40%. With nerves of steel and a blind eye, I ignored my portfolio. I figured it had nowhere to go but up. I didn’t need the money, and I was 20+ years away from any kind of retirement thoughts. “Let it Ride!” I declared.
I took a peek the end of June 2009 and saw that my portfolio was back in the positive. Not by much, I add, but still… .09% was better than -24.2%. By July 31, 2009, I was firmly planted in Investors Heaven, showing 12.9% ROI. Little by little, each stock was climbing out of the red and into the black. By August 28, 2009 my ROI was higher than it had been before the year before.
Invest in good companies, invest for the long term, and HANG ON! It’s gonna be a bumpy ride!