Best Moves in a Bad Economy Blog

Thanks to this week's rise, the Dow ended at 8,816.62, down 34% for the year. The S&P 500 ended at 907.22, a 38% decline. U.S. stocks did better than overseas, with the MSCI Europe Index down 45% and the MSCI Asia Pacific Index down 43% for the year. When you check your statements at year-end, you may find your losses are less if you've had a diversified portfolio.

What It Means to You

This week's rise could have been due to mutual fund managers seeking to balance their holdings. It could have been a temporary surge of optimism about the economic stimulus plan offered by the new administration. Then again, it could always be a signal that the stock market reached its bottom in 2008. The bottom line is that no one really knows, which is why you can't time the market, and why a well-diversified portfolio is always the best strategy for the individual investor. (Source: Bloomberg, U.S. Stocks Rise, December 31, 2008)

Best Moves Now

• What Should Stock Investors Do in a Troubled Market?
• How to Identify the Bottom of the Stock Market
• Why Advisors Tell You to Sit Tight During a Bear Market