Last year at the bottom in my meeting with my advisor we decided that there were a lot of good buys out there that were being tarred with the broad brush of the downturn. So rather than go to more cash we continued to buy and slowly the worm has turned and the portfolio is recovering nicely, I'm no longer afraid to open my statement. He was trying to explain to me something about how there is still almost 5 trillion in cash sitting on the sidelines that impacts things. But I didn't quite understand his point. Any of you guys have a simple explanation for me?
Well done TOK.....many,many good companies, sectors and indeed the entire market were priced at armageddon levels. The market is up 58% from the March low and a solid 18% since year end. Re: Cash on the sideline point is a comment on the relative levels of cash -v- risk assets many institutions and consumers are maintaining in their portfolios. By historical norms, there remains a large portion of cash in relation to equities or other investments thereby providing a further demand for risk assets/equities once investors tire of the paltry risk-free returns available to them and the cash gets put back to work.....
Cash "on the sidelines" usually refers to money in such things as money market funds that are safe but provide little real return. This cash is normally moved back into the market when investors feel that the economy is on the rise. If there is that much cash just waiting, it could move the market substantially. BTW to answer you original question, I've managed to recover a good portion of the downturn. I had a Lehman Bros. bond that lost 75% of it's value. I do have a nice holding in Dendreon Corp. DNDN that has done very well this year. It's helped.
Being in my retirement phase I haven't been able to take advantage of the buying opportunities... But I sat tight, rebalanced to maintain the diversification, and am OK.