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Dear Mr. Berko:

Dear P.R.:

A 67-years-young socialite who has been married five times and still maintains her six-figure figure told me several years ago: “Before I marry a man, he ‘yearns’ for me. And after marriage, I make certain that the ‘y’ is silent.” She is called “The Black Widow” by some of her admirers, and she makes a business out of marriage.

However, I think you’re more likely to win the lottery than see your 401(k) plan recover in five years. In March, the Dow Jones industrial average and the Standard & Poor’s 500 index really took off. It seems that lots of lost investors took this as a sign that the market had hit bottom and was on the road to recovery. A whole lot of folks believe that March’s market madness was a sign the Standard & Poor’s and Dow would march right back up and caress the old highs of 2007. Well, P.R., I’m sorry to disabuse you and millions of other investors. I don’t think that will happen.

Frankly, I don’t know for certain if the market has reached bottom. But I do know for certain that your account will not recover in the coming five years to the high of 1,565 hit by the Standard and Poor’s in October 2007. All you need is common sense. But, as I’ve commented before, common sense is certainly not common.

Anyhow, let’s assume the S&P 500 really hit bottom in early March when it collapsed to 675. That’s a loss of 890 points, or 57 percent, from the unrestrained hubris of 19 months ago. Well, you’re going to need a lot more than five years for the Standard & Poor’s to regain its lost ground, a lot more. If the market could average a gain of 18.3 percent each year for the next five years, then the index could move back to 1,565.

Don’t hold your breath. Historically, the average annual return for Standard & Poor’s 500 since 1926 is 9.6 percent with dividends reinvested. At that rate, it would take the market more than nine years of consecutive 9.6 percent returns to return to the October 2007 high-water mark.

What’s more, this market won’t begin moving back up until employment begins to pick up. So as long as unemployment continues to increase, the market lacks the necessary foundation to convincingly move higher. It’s as simple as Simon. Yet the Obama administration doesn’t seem to get it.

Consumer spending represents 71 percent of the U.S. gross domestic product. And common sense suggests only consumers who are employed have incentive to borrow and spend money. Unemployed consumers only have incentive to husband their dwindling assets.

The government needs to create jobs, not give money to banks and encourage them to be more liberal and aggressive in their lending practices. After all, liberal and aggressive lending practices is what got our economy into trouble in the first place.

The next thing that must happen is that CEOs of American industry — IBM, General Electric, Bank of America, Dow Chemical, McDonald’s, Dell, Humana, Boeing, Exxon, etc. — must step forward as one voice and announce to the world that they and Congress are working together to put America back on a path to progress. The dissonance between corporate America and the Obama administration is counterproductive. If the two can’t constructively work together, then a recovery could take a dozen years or longer.

Lastly, a grandstanding, do-nothing Congress must get its act together rather than squabble over political differences for political gain. That’s why I define politics as two words: “poli,” a Greek word meaning a large number, and “tics,” which are bloodsucking parasites.

Anyhow, there is good news and there is bad news. The good news is that the stock market will recover. The bad news is that it’s going to take longer than the five years you hope for. Keep working as long as your health permits, because you’re going to end up with the short end of a very long stick if you don’t.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. © 2009 Creators Syndicate Inc.