Review Of What Happened In The Stock Market In 2009

If you are a mutual fund investor, you might want a review of what happened in the stock market in 2009. As a mutual fund investor, this seems to me to be the only strategy that you would want to buy and hold with. I don't really believe in it for individual stocks because individual stocks are to easy to manipulate once the big money starts flowing into them. It can't happen that way with a mutual fund.

But, if you look back at 2008, the market had tanked and in 2009, the market rebounded in a major way for the most part. Because in a mutual fund, you own shares in the mutual fund and not the individual stock, there is a good chance that in the stock market today the value of your fund might be as high as 40%. Whatever it is, it is most likely up.

I have a family member that liquidated their mutual fund at the lowest point. If they would have held onto it, they would have recovered most of it in 2009. But, they were scared by the stock market investing news of the day and cashed in, locking in their loss. If they had been in any individual stock, I think that I would have recommended they cash out. Because we know that any one security could go to zero. The likelyhood of the net asset value (NAV) of a mutual fund going to zero is highly unlikely and the manager is going to work to improve the NAV. He can trade into better performing shares of stock even if there is a stock market crash. While he might have to stay fully invested, he can adapt.

You need to learn about what happened in the stock market in 2008 and 2009, because it illustrates when you should buy and hold and when you should not. Buy and hold a mutual fund, buy and sell individual stocks to lock in gains or sell them immediately if they drop by 7-8% of your purchase price.