Inexplicably, investors are more afraid of runaway inflation than depressions or panics, although both have occurred more frequently in our nation’s economic history. Even during this last face-off with possible depression, most investors were more concerned about inflation than deflation, perhaps the main symptom of an economic depression

January was the first real down month since the market recovery began on March 9, 2009. In January, an investment in the Vanguard 500 Index Fund (VFINX), which owns the stocks in the S&P 500 and includes dividends along with (ultra low) fund expenses, would have returned a negative 3.6%. The only other interruption during the strong comeback was a 1.87% drop in October 2009.

For stocks, 2009 was the best of times and the worst of times. It was the end of an Age of Foolishness, but unlikely the dawn of an Age of Wisdom. 

The S&P 500 rose just under 6% in November -- enough to bring us to a 25% gain for the year (though the market is still down by 16% over the last three years). The Dow had an even bigger month, scoring a near 7% return. The Nasdaq posted a 4.87% gain. In general larger-cap stocks beat smaller caps, with the Russell 2000 small cap index delivering a ho-hum-by-comparison 3.14% advance. Interest rates crept back down delivering a 1.68% return for long-term bond holders, though the one-year performance is only 1.4%