I decided to go back to learn something about how markets
respond to financial crisis [in the past]. 
As a result, I think you will agree that there is great reason for cheer!

Considering the portfolio that we are utilizing: notice that
we have it diversified in 60% equities, 40% bonds.  The 60% in equities is diversified not only
here in the United States in small, microcap and small value positions, but
also in International value and [international] small value positions as well.
[Please email me if you would like the model portfolio allocation.]

Beginning with the October 1987 crash, notice there is a
total return at 1 year, 3 years, and 5 years later.  Not only are all 3 of the returns positive,
but after 5 years there was an almost 60% return.  Meaning, if you invested $1m in the middle of
the 1987 crash, 5 years later your $1m grew to nearly $1.6m.

Fast forwarding a bit to the August 1989 Saving and Loan
Crisis: again we see after 5 years there was substantial appreciation of almost
50%.  In September 1998, the Russian
Crisis occurred, as well as the Long Term Capital Management collapse.  Notice once more that if you invested your
capital in the midst of the crisis, 5 years later you would have seen an almost
50% return yet again.

March, 2000 brought the Dot Com crash.  If your $1m was invested in a diversified
portfolio, after 5 years your $1m would have grown to $1.5m.

This next scenario is perhaps the most shocking.  September 11, 2001. If you invested $1m in
the middle of September 2001, during the terrorist attack on the United States,
5 years later your portfolio would have grown to almost $1.85m – a gain of roughly
85% during the subsequent 5 year period.

As a result of the most recent crisis, the bankruptcy of
Lehman Brothers in September 2008, 3 years out we can already see positive returns
from the equity markets.  The question
is, though, what will the next 2 years bring? 
On average, over the last 5 financial crises, if you were fully
diversified in the portfolio discussed, there has been an approximate 50% total
return [during the following five years.] We’ve only captured about 10% of
that, which means that the next 2 years [statistically speaking should bring
approximately] another 40% return!

Reason for cheer? Absolutely! Currently, the earnings to price
ratio of the S & P 500 – the greatest 500 companies in the word – is
8%.  Meanwhile, the 10-years Treasury
bond is only yielding 2%.  That 8%
earnings per price ratio has not been this high since 1981 – the last 30
years.  Also, that ratio of 8% earnings
yield versus the 2% bond yield – that multiple of 4 has NEVER occurred in the
history of investing! This is how undervalued equities are right now and how
overpriced and overvalued high quality bonds are.  The reasons lies in the moods of fear and
pessimism, but once [investors move to exploit the great valuation divide,]
look out for equity markets!

Know your portfolio [strategy, and know your
investment principles.]  Make certain your
properly invested to capture these market returns.  As I always conclude, your survival is on the
line.