Comments on: October Looks to be the First Negative Return Month Since February http://allfinancialmatters.com/2009/10/29/october-looks-to-be-the-first-negative-return-month-since-february/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Fri, 25 May 2012 21:22:26 +0000 hourly 1 http://wordpress.org/?v= By: BG http://allfinancialmatters.com/2009/10/29/october-looks-to-be-the-first-negative-return-month-since-february/comment-page-1/#comment-440344 BG Fri, 30 Oct 2009 00:13:25 +0000 http://allfinancialmatters.com/?p=4179#comment-440344 October has seen the US dollar trying to stabilize from it's free-fall since early March. In that time, the USD Index is down about 15% (meaning every dollar you owned on March 1, is now only worth 85 cents today). This is why you've seen gas prices shooting up: gas is not more expensive, your dollars are just not worth as much. Now, looking back at May, the USD lost about 6.4% in that month. The return of the S&P 500 was actually -1% (or so) for May in "constant currency". In summary, your investments need to rise faster than your currency falls, otherwise, your are losing "real" wealth. October has seen the US dollar trying to stabilize from it’s free-fall since early March. In that time, the USD Index is down about 15% (meaning every dollar you owned on March 1, is now only worth 85 cents today). This is why you’ve seen gas prices shooting up: gas is not more expensive, your dollars are just not worth as much.

Now, looking back at May, the USD lost about 6.4% in that month. The return of the S&P 500 was actually -1% (or so) for May in “constant currency”.

In summary, your investments need to rise faster than your currency falls, otherwise, your are losing “real” wealth.

]]>