DALLAS (BP)–March 9 marked the one-year anniversary since the U.S. stock market’s low point during the tumultuous 2008-09 financial crisis. One year prior, investors already fatigued from unprecedented volatility looked on as the Dow Jones industrial average closed at 6,547 and the S&P 500 closed at 676 — 12-year lows for both indices.
Financial recovery ensued for both stocks and bonds, in keeping with historical trends. As of the close of business on Tuesday, March 9, the S&P 500 was up nearly 70 percent from its March 2009 low point, while the Dow closed up 61 percent. For fixed income, the Barclays Aggregate Bond Index was up 9.31 percent on March 9 from a year earlier. While many effects still remain from the recent downturn, the significant gains have been a welcome relief for investors who stayed the course and did not panic.
The recent rally brought welcome gains for GuideStone Funds’ investors as well. For example, the GuideStone Small Cap Equity Fund (GS4 Class) grew by 89 percent and the GuideStone Real Estate Securities Fund (GS4 Class) increased by more than 127 percent from their March 9, 2009, lows. In the bond market, the GuideStone Global Bond Fund (GS4 Class) saw an increase of 51 percent and the GuideStone Extended-Duration Bond Fund (GS4 Class) increased by 38 percent from the market low in March 2009.
Officials at GuideStone Financial Resources note that such growth is not common and likely will not be soon repeated. Therefore, these results should not be used to predict results in the future. Investors should make investment decisions based on their long-term objectives, not on short-term performance, officials at the Southern Baptist entity state.
Correlating with the market’s gains, as of the end of 2009, most GuideStone 403(b) retirement plan participants saw their average account balances recover more than 40 percent from the low point of the market.
“During the past year, we’ve experienced the effects of incredible financial market growth and participants have seen the benefits of maintaining consistent contributions and asset allocations,” GuideStone Chief Operating Officer John R. Jones said.
Participants who maintained their asset allocation and contribution schedule throughout the decline and subsequent growth of the market experienced two benefits. They were able to purchase shares at decreased prices during market lows, and as the market recovered, they experienced significant growth in their accounts. This investment technique is known as “dollar-cost averaging” and may be a helpful option for those who pulled out of the market and are looking for a way to get back in.
GuideStone continues to recommend a long-term perspective for its participants. This investment strategy involves steady contributions to a portfolio, with an allocation in line with the investor’s age and risk tolerance and maintaining that allocation until life conditions necessitate a change.
“We should all avoid making emotional changes based on short-term market swings,” Jones said. “Whether we experience a negative swing like we saw throughout 2008 and early 2009 or a positive swing like the one we’ve seen over the past year, our perspective should remain on the long-term.”
GuideStone offers several resources to help participants invest with a long-term perspective. Most recently, GuideStone has made available GPS: Guided Planning Services. The online service helps identify retirement planning gaps and offers advice on how to reallocate funds to stay on track. Participants can learn more about the tool and try it for themselves by visiting www.GuideStone.org/GPS.
Curtis D. Sharp is the executive officer for denominational and public relations services for GuideStone Financial Resources of the Southern Baptist Convention.