“What if investors, instead of fleeing to cash during the tumultuous times, instead invested more money following each of the worst days in the market?”
More talk of reopening economies is giving stocks a boost on Thursday, but a test is coming ahead of the open, with another set of bleak unemployment claims in the U.S.
It sets up a hypothetical situation with two investors. One adds $5,000 to a stock market portfolio after each of the market’s 20 worst days during 2008 and 2009, and the other does nothing. The short answer — the investor who was brave enough dip a toe in markets ended up with $300,000 more by end-2019.
The call Our call of the day comes from the portfolio manager of the Plumb Balanced Fund PLBBX, -1.46% PLBBX, -1.46%, Tom Plumb, who has lived through big market turmoil — the oil embargo and inflation crises of the 1970s and the 1987, the technology bubble and financial crisis crashes. The lesson here, he says, is that investors build up expectations of how a market will perform based on past experiences and can sometimes get surprised the wrong way.
The buzz Data shows another 5.25 million applied for jobless benefits in the latest week. Housing starts — the number of new homes on which construction has started — declined 22%. The Philadelphia Federal Reserve manufacturing index is ahead.
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