It’s common knowledge that 2009 was a terrible year in the stock market. But a quick look at the numbers shows that an investor in the TSX composite index using the iShares capped ETF (ticker XIC) with reinvested dividends would have made 33.5%! That’s a great gain.
Just a minute, some readers would say. People are lumping in the losses in late 2008 as well when they say that stocks have performed poorly. Fair enough. Taking 2008 and 2009 together, XIC with reinvested dividends lost 5.6% per year. This isn’t exactly devastating, but it’s no fun either.
What about an investor who made regular dollar-cost averaged investments of new money in XIC over the past two years? This new money that was invested for between zero and two years would have actually made a gain of 13.5%.
These actual figures contrast sharply with the despair felt by investors through the depths of the paper losses in March 2009. It’s clear that those who stuck to a long-term plan either lost little or actually made money, and those who sold out during the stock price lows were the ones hurt the most.