I saw a “60 Minutes” program a couple of weeks ago. It purported to be about 401(k) plans, but it spent the first part of the program talking about people at a job fair. As far as I could tell, the only connection with those people at that job fair was that their 401(k) account balances had taken a hit, along with their job prospects. There was even one man who opened his 401(k) statement on the air, to show how much he lost. While this opening did not have the drama of Geraldo Rivera opening Al Capone’s vault, at least there was something inside. I have to say, though, that I don’t quite understand why someone going to a job fair would bring along an unopened 401(k) statement.
In any event, this gentleman, and then a lady, discussed the fall of their 401(k) balances regretfully, and even tearfully. Hopes and dreams they had for retiring had vanished. Instead of being a few years away from retiring, they faced the prospect of working for a significant number of years, and as their attendance at the job fair attested, they were having to find new jobs to continue to work.
Many people who received their statement for the 1st quarter of 2009 had disheartening news. For the first quarter, my favorite market gauge, the S&P 500, dropped from 903.25 to 797.87, more than a 10% dip. And that’s on top of the 40% drop in that gauge since its October, 2007 high. Everyone’s wondering when it will end.
I think it already has ended, but I can’t sit here and say I know that for certain. There are quite a few people out there who think this a bear market rally, or a suckers’ rally. Some pundits say that there’s another drop coming, to as low as a 600 S&P.
It’s hard to say why I feel the bottom has been reached. Part of the reason is that the market has trended up now for the past two months. More than that, if I look at an historical chart for the market, I see spikes in 2000 and 2007, but if I smooth out those spikes, I get a line above where the market is today. As I read the various reports on the economic tea leaves, I see good news and bad news, but the good seems to be outweighing the bad. Reading the opinions of the various bulls and bears, I read comments on both sides, but more positives (albeit cautious positives) than negatives. Looking at the funds we offer in our 401(k) plan, I see that 15 out of 19 are positive to date in 2009.
So, what’ll you see if you open a statement for the year, or look at your account balances online? When I looked at mine, I had a net gain. Not a big gain, mind you, but still a gain. I haven’t returned to the high points of 2007, but I’m moving forward. It’s like I’ve ridden out the hurricane, and my ears are still ringing from the howling wind, but it’s time to go outside, assess the damage and start the cleanup, because the storm has passed.