Breaking Even and Beyond

Just about all investors are glad that 2008 is behind us. We now know that the stock markets peaked in early October of 2007 and have hit what many have called a “generational low” on March 9^th, 2009. (The Aubry & Eustice portfolios actually bottomed on the last day of February.)  Since the beginning of March, we have seen the stock markets around the globe increase dramatically.  From March 1, 2009 through September 30, 2009, the S&P 500 is up 45.76% and the EAFE Index (the S&P 500’s international cousin) is up 60.02%.

While I typically talk about the markets in general terms and refer to indices only (such as the S&P 500), I am going to speak specifically about the Aubry & Eustice portfolios, both the negatives and the positives, and how they compare to the most well-known indices, over the last 24 months.

The following is a list of the Aubry & Eustice portfolios, the S&P 500 and the EAFE.  The list shows three columns: the total return percentage loss from October 1, 2007 through February 27, 2009, the total return percentage needed to break even after that loss and the third column shows the percentage return from March 1, 2009 through September 30, 2009:

____________________Total Return %                             Total Return %                            Total Return %

____________________10.1.2007-2.27.2009              Needed to break even             3.1.2009-9.30.2010

International 97                          -56.81%                               131.53%                                            78.09%

International 88                           -51.90%                               107.9%                                              71.07%

International 75                         -45.42%                                  83.22%                                              59.06%

International 50                          -31.09%                                  45.12%                                               37.82%

Standard 97                                   -54.89%                                  121.68%                                             72.23%

Standard 88                                   -50.93%                                   103.79%                                            64.60%

Standard 75                                   -44.50%                                   80.18%                                              53.69%

Standard 50                                   -30.40%                                   43.68%                                              34.60%

Standard 25                                   -13.68                                        15.85%                                              17.42%

___________________________________________________________________________________

S&P 500                                         -50.17                                           100.68%                                           45.76%

EAFE Index                                 -54.68%                                          120.65%                                            60.02%

While it looks like the odds are insurmountable and that it will take years to get accounts back to even, the reality, when applying principles of Evidence-Based Investing, is much different.  The last time we had a major drop in the stock markets (April 2000 - March 2003), the following 18 months saw spectacular returns.

_____________________Total Return %

_____________________4.1.2003-9.30.2005

International 97                         129.18%

International 88                         120.64%

International 75                          98.61%

International 50                           61.43%

Standard 97                                  121.28%

Standard 88                                  107.19%

Standard 75                                   88.47%

Standard 50                                   56.02%

Standard 25                                     27.71%

________________________________

S&P 500                                            51.41%

EAFE Index                                  100.20%

As the “experts” argue about whether the latest “recovery” is sustainable or not, we would like you to know that many of these same “experts” were talking about how long it would take to recover after the last stock market crash.

As was stated in our August 26^th, 2009 article (http://aubrygroup.com/beyond/2009/08/evidence-based-investing-vs-market-timing/):  “With Evidence-Based Investing, we are not worried about timing the ups and downs of the markets.  The evidence shows that in order to be a successful, long-term investor, it is imperative to stay focused on one’s time in the market, and not one’s ability to time the market.”

Evidence-Based Investing shows us that investors should:

1. Have a Plan

2.  Maintain Proper Asset Allocation

3.  Manage our Behavior

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