Thursday, March 12, 2009

bear market veterans

The S&P 500 Index has fallen nearly 55% since Oct. 9, 2007--an outcome worse than that of any other bear market since 1929 (when the Dow Jones Industrial Average plummeted more than 80% in less than three years). But there have been some periods with results similarly gnarly to the most recent drop, including the bear market that began in January 1973, which ultimately saw the S&P 500 fall nearly 50%. Granted, there were some other differences back then, including higher inflation and a drawn-out decline. (It's been faster this time around.)

Still, we wondered if funds led by portfolio managers that ran money in the 1970s have been better off in the latest downturn.

Morningstar identified twelve managers with tenures ranging from 32 years to 50 years. All lost money in the period from 10/9/07 to 3/9/07 with returns ranging from -29% to -50%. But all beat the S&P 500 which lost 55%. Looking at 10 year returns, 10 of the 12 beat the S&P 500 which returned an annualized -4%.

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