Putnam Hopes to Convince Investors to Stay in the Market
News summary by MFWire's editors
With Mr. Market zigging and zagging all summer, investors are understandably concerned about their savings. A new Putnam Investments study aims to convince those investors that the most prudent thing to do is to stay in it for the long haul. Among the study's findings is that a $10,000 investment in the S&P 500 Index in 1988 would have grown to $72,932 by June 30, 2008 despite the 43 percent downturn of 2000-2002.
Company Press Release
BOSTON (August 26, 2008) - With the S&P 500 Index down over 12% for the
year as of July 31, 2008 and ongoing market turbulence, many investors may
feel better selling but a recent study by Putnam Investments of bull and
bear market cycles makes the case for investors to stay invested for the
long term.
Bull markets have lasted longer
The study measures each bull and bear market by at least four consecutive
months of continuous gain or decline, as measured by the S&P 500 Index. It
found that over the last 60 years, there have been 12 bear markets, lasting
an average of 14 months and declining a total of 22.4% before recovering.
By contrast, the 12 bull markets since 1948 have lasted an average of 45
months, each growing an average of 123.9%.
The study found that a $10,000 investment in the S&P 500 Index in 1988
would have grown to $72,932 by June 30, 2008 despite the 43% downturn of
2000-2002.*
“Whether the current bear market has reached a bottom or not is unclear,
but one thing we know from this study is that market gains have more than
made up for losses for those investors who stayed invested over the long
term,” Elaine Sullivan, Head of Retail Marketing. “The market has always
recovered but by trying to predict the best time to buy and sell, investors
may miss the market’s biggest gains.”
Source: Putnam Investments. Data illustrated using S&P 500 Index.
Five questions investors should ask?
For investors who are nervous about the current markets, Putnam suggests
the following questions to determine if any changes are necessary for their
particular needs:
Is your portfolio properly diversified?
If you sell shares today, will you be selling at a loss?
Will you need access to your money soon?
Are you investing at regular intervals?
Have you checked in with your financial representative?
“A diversified portfolio can temper market extremes and still build wealth
over time,” Sullivan said. “When the markets are volatile, talking to a
financial advisor can help investors stay on track and avoid making any
rash decisions and common mistakes that could hurt a portfolio's growth.”
About Putnam
Founded in 1937, Putnam Investments is one of the nation's oldest and
largest money management firms and a leading retirement plan provider. At
the end of July 2008, Putnam managed $165 billion in assets, of which $97
billion is for mutual fund investors and $68 billion is for institutional
accounts. Putnam has offices in Boston, London and Tokyo. For more
information, go to www.putnam.com.
*Performance for other periods will vary. It is important to note that not
all segments of the market have recovered from the downturn of 2000-2002.
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