As of Monday, March 2nd the S&P 500 is already down about 22%, including dividends, in 2009 – more than half of 2008’s loss of 37%. The market is now down over 50% from the peak in late 2007. We used this downward spiral to make some more changes to the portfolio, detailed in our portfolio commentaries a few days ago. The goal of this trade was to sell our successful inverse commodities ETF (after an over 300% return), cut back on some recently added closed-end funds that are no longer a bargain, and to increase our overall stock allocation slightly.

2009 is starting off even worse than 2008. In January, the S&P 500 fell by 8.41%, with a similar drop in the Dow of 8.65%. Small cap stocks fared even worse with an 11.12% slide in the Russell 2000 Index, which measures smaller cap stocks. Even the mighty long-term government bond slid a sharp 8.5%, ending last year’s meteoric run. Tech stocks were relatively strong with a 6.3% drop in the Nasdaq and a mild 2.29% drop in the larger cap-oriented Nasdaq 100.

The New Year is traditionally the time of New Year’s Resolutions, “I will eat less and exercise more” or “I will quit smoking”.  New Year’s offers everyone a time to reflect on past behaviors and decisions and commit to resolutions to fix, or prevent, bad behavior. Unfortunately, the investment community doesn’t waste much time on such resolutions. If they did, the list of resolutions  for 2009 would be extensive.