So the Dow hit an all-time last week. That’s great for all of us equity investors, unless, of course, you bought smaller cap or technology sector funds in the late 90s when the NASDAQ was racing up to the 5,000 level. Since the NASDAQ has only “recovered” to 2,500, you might not be such a happy camper.  Let’s also not forget that the Dow fell by almost 700 points from February 20 to March 16 this year, or that the Chinese stock market fell 4% in one day last week. 

 

Investing is a tricky business, especially investing in stocks. Just because one market or group of stocks is doing well doesn’t mean that you’re making money (although it also doesn’t mean that you should change your strategy and chase what’s in vogue. That’s probably the surest way to lose money.) So diversify your investments, trust a professional – two good reasons to buy mutual funds – don’t get swept up in the excitement on the upside and don’t become depressed when stocks correct. (Speaking of market corrections, rest assured that the Dow will correct.)

 

In my April 16^th posting, Elvis Has Left the Building, I talked about the seasonal effect of money flowing into the market from bonuses and retirement plan contributions. There’s a good article summarizing the pros and cons of this argument in yesterday’s New York Times, The Calendar Says ‘Sell,’ but Should you Obey? which makes for great reading. Just another reason to be cautious.