As we near the end of 2008, looking back we see a year that has treated investors with scorn.  Many investments have been cut in half this year.  And many more investments have done even worse than that. 

In fact, if you were an investor paying close attention to your 401k mutual fund choices, it seems likely that you probably had money in an energy fund or energy services fund around July 1.  Why?  Because if you were paying attention, those were some of the few funds that were up nicely for the first half of the year.  Most funds were down, but energy and commodity funds were doing just fine.

So, by paying attention, it might seem logical to move even more money into those funds that were doing so well.  After all, diversification was not doing you any good!  Everything but commodity funds were doing poorly.  So, why not move more money into those funds doing well.  You probably did just that.  And you probably got killed over the latter half of the year.

Energy and commodity funds are down way more than 50% over the latter half of 2008.  After all, a barrell of oil has fallen from around $150/bbl all the way down to $45/bbl, over a $100 decrease.  Percentage-wise, a barrell of oil is only worth about 1/3 of what it was worth 6 months ago, roughly a 66% LOSS!  Ouch.