While only a point-in-time measurement, for all of 2007, the Dow (^DJI) was up 6.4%, the S&P 500 (^GPSC) rose 3.53% and the Nasdaq composite (^IXIC) was up 9.8%. Small cap stocks (^SML) wound up losing about 1% for the year, and so far, the overall downturn has continued into the new year.
I mention this because my retirement portfolio, which I probably should be leaving alone, has been 100% invested in cash (VMMXX) since mid-2006. While I don’t like speculating (market-timing) with my retirement portfolio, in hindsight, it seems that this move to cash turned out to be a good choice, and may wind up being even better if the markets continue falling.
According to Vanguard, my 2007 total return was 5.14%. Not nearly as good as gold (and other sectors), but better than or comparable to most bond funds or the “big 3″ market indices, and without all of that volatility.
However, I’m not considering this a successful venture unless the market continues to drop and I can get back into the stock market at prices lower than when I bailed.
Ironically, while everyone’s looking to escape the stock market, I’m looking to get back in and hoping to do that soon. Money market rates have fallen, and with the Fed expected to cut rates again, their yields are not going to be as appealing as they were last year.
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