Deceiving Recovery

I'm sure all would agree that this year has been a recovery if you just look at percent gain vs percent loss. But being an engineering major, I need to see the numbers from the bottom line in terms of cash (total loss vs total gain). What I found was quite interesting as percents can be deceiving:

Jan 1 to Dec 31, 2008 I had a 401k loss of 15%
Jan 1 to Oct 8, 2009 I have a 401k gain of 39%

At first one may think..."Wow I totally made up all the cash I lost from last year!"

Now let's take a look at the bottom line...

Jan 1, 2008 401k value: $122k
Dec 31, 2008 401k value: $104k
2008 Contribution: $22k
Gains/Losses from investing: ($40k)
Bottom Line Formula = (104-122)/122 = -15% loss

Jan 1, 2009 401k value: $104k
Oct 8, 2009 401k value: $145k
2009 Contribution (thus far): $18k
Gains/Losses from investing: $23k
Bottom Line Formula = (145-104)/104 = 39% gain

The reason for this discrepancy is in the numbers:

• For every $1 invested in 2008, I lost $2.
• But for every $1 invested in 2009, I gained back only $1.

So my bottom line return from investments in 2009 ($23k gain) is still behind what I lost in 2008 ($40k loss).

I don't consider this a recovery yet, do you?