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Investing After the Bear Market

After three years of hearing bad news about the bear market, you may be the one growling when you think about investing. But there's some good news! As of September 30, 2003, the stock market was up about 25% from its low for this year in March.

A bear market is defined as a decline of at least 20% in the value of the stock market that lasts for at least two months. The bear market technically ended a few months ago. Finally you can enjoy receiving your account statements again. More importantly, you can face the uncertain future with the wisdom of experience. You can learn a lot about investing in the stock market from living through a bear market, such as:
  • Don't think there's a "right" or "wrong" time to invest in stocks. That's a market-timing approach – an unreliable strategy for accumulating wealth. Many investors who took their money out of the stock market missed out on the 25% average gains of the six-month period between March and September.
  • Include stocks and bonds as part of a diversified, long-term investment account. Any long-term investor who hopes to accumulate wealth for future financial needs must be at least partially invested in stocks. Investing in bonds or short-term reserves only for an extended period won't give your money the chance to grow enough to outpace inflation. However, including some short-term reserves and bonds in your portfolio will provide an important cushion against the more extreme ups and downs of stocks.
  • To lessen risk, don't concentrate your investments in narrow market sectors or in a handful of individual stocks; choose broadly diversified stock and bond funds.
Today's investors can learn the same lessons from this bear market that investors who survived the Great Depression learned: what goes up comes down, and vice-versa. Because of the overall strength of the American economy, only 11 of the years since 1960 have had negative stock market returns overall (source: The Vanguard Group). However, no matter what happens in the short run, stocks make sense for the long-term investor.

Check Your Mix
You can check your mix of stocks, bonds, and short-term reserves at any time by registering for online account access at®. Registering for online access is simple and takes only a few moments:

1. Go to
2. Click the account registration link and follow the instructions provided. You'll need your plan number (090042 for management employees; 090041 for weekly employees), Social Security number, birth date, and home ZIP code.

When you log on to your account, you'll see a pie chart that shows your current mix of stocks, bonds, and short-term reserves next to your account balance. If you want to make changes, select "Rebalance My Account" or "Change Future Contributions" from the "I Want To" box on the right side of the screen.

Call Vanguard® Participant Services at 1-800-523-1188. Associates are available Monday through Friday from 8:30 a.m. to 9 p.m., Eastern time.

Vanguard and are trademarks of The Vanguard Group, Inc. All other marks are the exclusive property of their respective owners.
For more complete information about any fund, including charges and expenses, call The Vanguard Group at 1-800-523-1188 to obtain a prospectus. Read it carefully before investing. You can also download Vanguard fund prospectuses at

© 2003 The Vanguard Group, Inc. All rights reserved. Used with permission.