The S&P 500 recovered in 4 1/2 years from the 2008/ 2009 recession.

It took nearly 4½ years, but the cumulative wealth of an S&P 500 strategy with dividends reinvested finally reached an all-time record (measured on a month-end basis) in March 2012, and finished the year 3.3% above the previous high-water mark set in October 2007. Results were slightly better for a small-company Russell 2000 strategy: As of December 2012, cumulative wealth was 8.5% higher than the previous peak in May 2007.

The table below shows how many years were required to achieve a new high in terminal wealth during some of the major market cycles in the past. Although many investors have expressed frustration with stock market fluctuations in recent years, the time required to recover losses from the peak in October 2007 appears broadly consistent with past cycles. We can draw some measure of solace in acknowledging that past generations of investors often found their patience sorely tested, as well.

Market Cycles Based on Month-End Value of S&P 500 Index with Reinvested Dividends

Every year brings its share of surprises. Perhaps the biggest surprise of 2012 was the strength in stock and bond prices around the world despite a steady stream of discouraging news events. Individual investors and professionals alike were often flummoxed by markets that failed to behave in accordance with their pessimistic assessment of the future.

Download the entire report and commentary from Weston Wellington (DFA) A look back at 2012 by Weston Wellington DFA

We should all focus on the core activities that we can control and avoid the short term noise of the markets.  Have a plan and stick to it.

1)  Work with a fee only Fiduciary who has a legal obligation to put your interest first.  Many advisors do not have this legal obligation.

2)  Control factors that matter most.  Reduce fees, taxes, turnover, transaction costs and eliminate market timing.  Focus on asset allocation and work with an advisor that charges 1% or less for $500k or more.  Complexity = Confusion = High Costs = Bad outcomes for you, the Investor.

3)  Most actively managed mutual funds fail to beat their index over extended periods.  Focus on passive investing and asset allocation.  Not chasing hot returns.

4)  You may need to do all of the above and save more to hit your retirement goals.  Have a plan for your risk tolerance.

5)  Get a 2nd opinion from a fee-only Fiduciary.  Someone who has a “legal loyalty” to put your interest first.  Give us a call at 303-549-4720.

Who we are:

Integrity Investment Advisors, LLC is a fee-only independent Registered Investment Advisory Firm.

We are headquartered in Fort Collins, Colorado and serve clients on a national basis. If you know anyone who may benefit from our services, please contact us. 2013 Press Release: Integrity Investment Advisors, LLC and Managing Partner Todd Moerman are pleased to have recently joined an exclusive group of wealth managers offering the low cost mutual funds of Dimensional Fund Advisors (DFA) to its clients. We are an approved DFA advisor.