YOKOSUKA NAVAL BASE, Japan — Three months ago, some investors bolted from the stock market as the Dow Jones plummeted to its lowest mark in more than a decade.
But investors who sold their positions and kept their money on the sidelines are now poorer for it.
As of mid-June, the Dow is up 26 percent since what turned out to be the current recession’s rock-bottom so far — 6,547 on March 9.
Investment professionals warn against attempting to time the market’s peaks and valleys. A consistent plan will yield better results for the average investor, they say.
However, actively managing a portfolio can produce better returns.
Master Sgt. Phil Philbee of the 374th Force Support Squadron didn’t catch the market’s floor — but he came close enough.
"About two months ago, I kind of saw some of the shifting that was happening and I redirected my investments, not totally back over to the aggressive side, but a little bit that way," Philbee said.
During the past year, Philbee pulled out of international funds and individual stocks in favor of more diversified mutual funds and the military’s Thrift Savings Plan.
Within the TSP and most retirement plans, investors can adjust the concentrations of their funds to match their comfort with risk.
As a group, servicemembers tend to be conservative investors, according to TSP figures. The plan’s G Fund, comprising short-term U.S. government securities, is the default fund.
It also is its most conservative fund and more than twice as popular as the common stock C Fund in terms of total assets.
There is no single answer on when and what to invest in because goals differ, said Michael Spiltener, who coordinates free financial education classes at Yokosuka Naval Base’s Fleet and Family Support Center.
Investors who consistently invest manageable amounts to reach their goals should generally avoid abandoning their plans during recessions, he said.
"Those who stuck to their plans and didn’t move their money have been buying cheaper shares," Spiltener said. "Over 20 to 30 years, the market tends to move in their favor."
While recent history has proven many stock market prognosticators wrong, there are several indicators of a looming stock market rally.
Among the many factors, some of the most reliable indicators include positive monthly unemployment figures, a rise in home sales and new construction, and Federal Reserve interest rate cuts.
Positive data for each of those indicators can signal a short-term rally, but without a consistent upward trend, rallies can fall flat.
The latest consumer price index result, which tracks price inflation, was scheduled to be announced Wednesday.
A big rise signals inflation and can trigger stock selloffs; a big drop can also drag down the stock market because it can mean lower demand for goods and therefore less revenue for companies.
Despite the uncertainty, some servicemembers took March’s bottom as an indicator that the worst is behind them.
Army Capt. Sarah Avitia, a command group administrative officer with the 10th Support Group at Torii Station on Okinawa, and her husband lost more than $7,000 since the market began its sustained fall.
Avitia owns property and precious metals to go along with more traditional offerings.
She is even evaluating investing in the now-risky U.S. auto industry, despite General Motors’ collapse and Fiat’s takeover of Chrysler.
"Now is absolutely the time to be investing," Avitia said. "If you put a little bit in and you lose it, big deal, because you got it for cheap and it will only get better."
Stars and Stripes reporters Natasha Lee and Grant Okubo contributed to this report.
