Lehman Brothers Files for Bankruptcy on September 15, 2008

This event sent shockwaves through the financial world and the global markets crashed. Swings of 5-10% in the global markets could be seen by the hour. It was chaos, despair and panic. Many sold their stock holdings and fled to Treasuries for safety in preparation for the Great Depression. Was it a good decision?
It depends on your long term goals. If you have plenty of money and don't need any growth then you are a bit ahead of where you would be had you held on. The S&P 500 closed at 1192.69 on September 15, 2008 and closed at 1165.73 on March 25, 2010. If you held on to the index you would only be down 2.26%.

If you are still in bonds unfortunately you have joined the masses of people who sold and missed out on one of the biggest stock market rallies in history. As described in a recent article on Bloomberg, "Americans Say They Missed 73% Rise in S&P 500 As Economy Surged." Unfortunately many sold at lower levels than on September 15th. Which means unless they got back in the stock market they are most likely worse off than if they just held on.

The worst case senario is if you sold in the middle of March of 2009 Since then the global markets are up over 70% and the Pimco Total Return Fund which now has over $200 billion in assets is up about 10%. That means the stock market now has a 60% spread on those individuals. This is the primary reason most investors don't achieve the average annual return of 10% over time and why most individual investors would be better off just buying and holding an index fund.

Good news! It's not too late to get back into the stock market. Maybe you will believe Bill Gross, the world's premier bond manager, who warned that the almost three decade fixed income rally may catch individual investors off guard as they invested $89 billion into bond funds this year. He said, "bonds have seen their best days." Source: Bill Gross Warning May Catch Bond Investors Off Guard, Bloomberg

Try to block out poor stock market forecasters like Robert Kiyosaki, author of the Rich Dad, Poor Dad series. He recently made a stock market forecast on February 22, 2010 called, "Doing the Deat Cat Bounce". He doesn't manage any money professionally, has never come clean with his total net worth, and his analysis is too simplistic. For a more critical critique of this "financial expert" please visit John T. Reed's web site here.