Each year at this time, I like to reflect on the year that was with the hope of gleaning a few nuggets of wisdom.  With the caveat that the last two years have been anything but ordinary, these are our observations on 2009: 

1.)  Investment decisions made on the notion that “it’s different this time” usually end up in the bucket of dumb investment ideas.   When fear ran rampant last March, it was easy to expect the worst.  Very few – including ourselves – would have guessed that the stock market would prove capable of climbing 70% off those lows, but that is exactly what happened.  For our portfolio, the most difficult investment decisions also proved the most profitable.


2.)  I don’t remember a year when so many folks were so distraught by the change in Washington and what it might mean for their investment portfolios.  As is so often the case, reality rarely ends up the way right wing or left wing extremists paint it to be, whether we’re talking global warming or the end of capitalism.  This year once again reminded me that politics and investment policy make for very poor bedfellows.  


3.)  Selling anything in 2009 was a mistake, just as buying about anything proved to be in 2008.  Good results are easier to come by when the markets are strong like they were this year.   


4.)  Hiring and training new employees is alot of work but it sure beats the alternative.  Installing new, firm wide software isn’t for the faint of heart either, especially if you lack an IT staff. 


5.)  The S&P 500 has been moving sideways at the 1100 level for most of the last six weeks, roughly the level it traded when Lehman Brothers went under fifteen months ago, ushering in a recession that far exceeded garden variety expectations.  Breaking above this level in 2010 could symbolize a similarly important healing point for the economy, the stock market and investors at large. 

Warmest Wishes for a Prosperous 2010!