The bear market is dealing a double whammy to retirement hopes. Not only is it crushing the value of 401(k) plans, it’s also hurting pensions. Pension plans among companies in the Standard & Poor’s 500 index could end 2008 underfunded by a record $256.74 billion, according to S&P estimates. That would top the prior record of $218.51 billion, set in 2002.
Rough recession recipe.
What’s the worst kind of recession? The one we’re in now, according to researchers at the International Monetary Fund.
After studying hundreds of recessions, credit crunches, housing busts and stock-market declines across the globe, they found that those associated with contracting credit and declining home values tend to be the deepest and longest.
Downturns with a severe credit crunch last an average of 4.3 quarters. A recession without one usually lasts just 3.6 quarters.
The January effect.
It’s time for party hats, New Year’s resolutions and a likely upswing for lower-quality investments.
High-yield “junk” bonds, for example, have done better than the super- safe 10-year Treasury 67 percent of the time in January, according to Merrill Lynch strategist Richard Bernstein. That compares with just 50 percent of the time the rest of the year.
The January effect also shows up in developing-economy stocks, which top global stocks overall 67 percent of the time in January, compared with 50 percent in other months.
Still dogged.
It’s hard to keep a blue chip down, or so says the “Dogs of the Dow” theory.
The investment strategy involves picking the 10 stocks in the Dow Jones industrial average with the highest dividend yield — its annual payout divided by its stock price — at the end of each year.
But in 2008, the Dogs are down an average 42.7 percent, including Altria Group, which fell out of the Dow early this year.
That’s worse than the overall Dow, which is down 35.8 percent.
