April 2009
SAVING : INVESTING : PLANNING
SPECIAL REPORT FROM THE EDITORS AT SMARTMONEY CUSTOM SOLUTIONS Keeping Cool, Come What May: Recession Lessons For Long-Term Investors The economy and the stock market are always in motion: moving from boom to bust and then back to recovery. When the economy is booming, it’s called an expansion. When it contracts, it’s called a recession. Likewise, when stocks are rallying, it’s called a bull market, and when they’re falling, it’s called a bear market. On December 1, the current recession became official. The National Bureau of Economic Research (NBER) announced that the recession began in December 2007.* While NBER can’t predict how long the recession will last, economists generally expect the economy to continue to contract through the middle of 2009. If it does, the recession will be the longest since the Great Depression. From an investing standpoint, this forecast may sound dire. But the important thing to remember is that the economy does move in cycles. There will be a recovery. And those investors who don’t panic and stay the course will eventually be rewarded. Measuring the Swings Including the current downturn, there have been 33 recessions since economists first began counting them in 1857. And there have been 26 bear markets since the worst one of all: the bear that followed the crash of 1929. Each and every downturn did end — and was followed by a period of growth. The current recession is, in fact, a deviation from a more recent pattern; recessions were getting shorter — just 10 months on average since the end of World War II versus 21 months between 1854 and 1945.** Meanwhile, recoveries have lasted an average of 57 months. (Bull and bear markets show a similar pattern, with bears averaging 382 days in length and bulls a heftier 721.†) The lesson for investors is that the economy always goes up and down. So try not to base investment decisions on temporary occurrences. † Standard & Poor's 500 Stock Index. Past performance is not indicative of future results. * "Determinations of the December 2007 Peak in Economic Activity", National Bureau of Economic Research (NBER) Business Cycle Dating Committee. **U.S. Business Cycle Expansions & Contractions," NBER Business Cycle Dating Committee.	In This Issue: Q+A Who Decides When We Are in a Recession? Presidential Election Cycles: How New Administrations Can Affect Your Investments IQ: Test Your Knowledge of Stock Market Behavior Password Overload 4Q 2008 Market Commentary: A New Beginning Latest Enhancements Make Plan Sponsor Online an Even More Valuable Resource For Your Group Contact Us Archives

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