Clock and Money

The Recovery of the IFA Index Portfolios

Clock and Money

Rare and severely punishing drops in the stock market can find investors wondering how long it might take for their portfolios to recover from a big loss. The table below shows the percentage amount of loss for the S&P 500 Index as well as for IFA Index Portfolios 100, 75, 50, 25, and 5 during the 16-month time period from November 2007 through February 2009, as well as the percentage gain that was required to restore each portfolio to its end of October 2007 high and the month in which the portfolio had made a recovery from the drop.

 

 

Loss from 11/1/2007 to 2/28/2009

Percentage Gain Required to Offset Loss

Recovery Month

S&P 500

-50.95%

103.87%

August 2012

IFA Index Portfolio 100

-57.04%

132.77%

December 2012

IFA Index Portfolio 75

-50.16%

100.64%

September 2012

IFA Index Portfolio 50

-36.34%

57.08%

December 2010

IFA Index Portfolio 25

-20.73%

26.15%

March 2010

IFA Index Portfolio 5

-6.88%

7.39%

July 2009

 

The 10 years ending in 2009 is often referred to as the "lost decade" due to the 9% loss for the S&P 500 Index over the period. However, with proper global and fixed income diversification and a small value tilt, the chart below shows how much better investors would have been. Please note that this gap is larger than what we have seen in other ten-year periods.