Scroll Top

Staying Invested in 2010

Investors want to maximize their wealth. Many believe that doing so requires special insight into the future direction of the market, interest rates, or corporate earnings. It doesn’t. The single greatest thing you can do to maximize your wealth is to stay fully invested in whatever strategy you and your advisors have set forth. Sound easy? Is it easy to stay focused reading a novel — in a football stadium — during the super bowl?

If you thought there were a lot of noisy distractions at the Super Bowl, take a look at these distractions for investors trying to stay fully invested in stocks in 2010:

  • An Economist cover story in January warning of asset price bubbles asserted that US stocks were “nearly 50% overvalued.”
  • The “January Indicator” signaled poor stock market performance for the remainder of the year.
  • A tragic drilling rig explosion in April produced a disastrous and hugely expensive oil spill in the Gulf of Mexico.
  • A bewildering “flash crash” on May 6th saw the Dow Jones Industrial Average plummet over 1100 points in the course of a few frantic minutes.
  • Hundreds of bank failures revealed continued weakness in the financial system.
  • A divided Congress passed a complex and potentially expensive healthcare reform bill.
  • Residential housing remained weak, with monthly sales of new homes falling at one point to the lowest level since tracking was initiated in 1963.
  • An obscure technical indicator dubbed the “Hindenburg Omen” generated a “sell” signal in August.
  • North Korea launched a deadly artillery barrage in November against South Korea’s Yeonpyeong Island.
  • A financial crisis with no clear solution gripped governments in Greece, Portugal and Ireland.

Investors able to tune these out were generously rewarded for their patience. Eight months into the year the S&P 500 stock index was down 5.8% – with no sign of imminent recovery. Nevertheless, stock prices surged over the subsequent five months and the S&P 500 index ended the year up over 15% – recouping all of its losses since the collapse of Lehman Brothers in September of 2008.

Let the pundits speculate about the future. In this moment, focus on what you can control and grow your wealth.


  • Research provided by Weston Wellington, Vice President, Dimensional Fund Advisors
  • Nouriel Roubini. “Mother of All Carry Trades Faces an Inevitable Bust” Financial Times November 1, 2009
  • Peter A. McKay. “January’s Chilling Effect on Stocks” Wall Street Journal January 29, 2010
  • “Bubble Warning” Economist January 7, 2010
  • Emma Moody. “Dow’s Worst May Since 1940” Wall Street Journal May 29, 2010
  • Jonathan Weissman and Guy Chazen. “Spill Tops Valdez Disaster” Wall Street Journal May 28, 2010
  • Sara Murray. “New Home Sales Sag to ’63 Levels” Wall Street Journal February 25, 2010
  • Marcus Walker and Charles Forelle. “Ailing Ireland Accepts Bailout” Wall Street Journal November 22, 2010
  • Evan Ramstad. “North Sparks Korea Crisis” Wall Street Journal November 24, 2010
  • Yahoo! Finance accessed January 7, 2011