I think the thing to remember here is its ALL about timing....buy the dow in 1930 an in 1939 your still down 49%....buy it in 1950 and in 1959 youre up 290%.....my issue is that there is a dislocation between the brokers who sell their company funds on the long term investment thesis and the fund managers who trade the equities based on quarterly performance(and yes there are some great exceptions to the rule.)Pay the 10 $ a month to morningstar ;do a little research on their data and you can finesse away to your hearts content going in and out.Oh and before you respond go ask any fund manager about the importance of alpha in their performance ....and how do half of them add that alpha?thats right they go in and out....oh plus you don't have to pay those nasty broker 'fees'

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non illigitamus carborundum

Yes, it has been flat for that long when measured from a peak. I am guessing that it took longer than that for the Dow to reagin its 1929 peak, and nearly that long to regain the 1960s peak.

Your scenario was flat after a 90% drop for 20 years. Has never happened.

because $1000 invested with 20% divs is better than $10000 invested at 2% divs.

trick question, sure. but it illustrates the point.

No shit art. I never said it did. That doesn't mean it's unlikely though - unless you consider flat markets or big drops unlikely.

where did you get 20%? It wasn't in your earlier post.

Of course 20% is better than 2%, but even better is if the 2nd guy waited unitl after the drop and invested his entire $10000 at 20%

that was the point of my thread.

It is pretty tough to combine the two. You really need a fundamental economic disaster or war to get them together.

That scenario is hopefully unlikely.

But, hey, I am the optimist here.

Everyone on here pretending they can time the market is pure bullshit. For some reason 85% of mutual funds, with the brightest, highest paid minds, underperform the indexes every year. Why? Because no one can beat the market over the long haul! (sans buffet) You all will revert to the mean and lose with all the fees you racked up along the way.

I'm with Saunaking 100%, dollar cost average back in. If any thing the brokerages want you to buy and sell, (they make more) it appears you 'active traders' are the ones fed all the nonsense.

The 20% requires some math: If earnings remain constant, and the company continues to pay the same dividend, then the new dividend yield is 20%.

It could happen with the scenario Matt posted: mass selling by the baby boomers.

Siegel talks about this in his recent book.

beautful, dow is down 200pts... Here comes the downturn, and I'm excited to be depositing all my money in my brokerage account to invest.

more on the 20%:



Dividend Yield = annual dividend per share / stock's price per share

2% = $2 / $100

20% = $2 / $10 , where the $10 is from the 90% drop in share price.

Wait a minute... I thought you said you couldn't time the market?

[reply]It is pretty tough to combine the two. You really need a fundamental economic disaster or war to get them together.

[b]That scenario is hopefully unlikely.[/b]
[/reply]
hopefully..
although the US is at war smack dab in the middle of a region producing 25% of the world's oil.

[reply]Wait a minute... I thought you said you couldn't time the market?[/reply]

Right i'm buying no matter what, even in the face of a down market.

Maybourne, Siegel is decent but alot of speculation about the future. You should check out Common Sense on Mutual Funds by John Bogle (started vanguard) also my other fav is: Intelligent Asset Allocator by Bernstein.

Actually you are completely wrong there are numerous managers who consistently outperform every year but they dont waste their talent at a mutual fund with a long-equity only restriction.They either strike out on their own or join a hedge fund /private equity outfit.hence the reference to alpha earlier.I am trying to make the same point as you that the mutual fund industry is no better than a dart throw in general BUT there are some great managers you just need a service like morningstar to help pick them.

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non illigitamus carborundum

[reply]Actually you are completely wrong there are numerous managers who consistently outperform every year but they dont waste their talent at a mutual fund with a long-equity only restriction.They either strike out on their own or join a hedge fund /private equity outfit.hence the reference to alpha earlier.I am trying to make the same point as you that the mutual fund industry is no better than a dart throw in general BUT there are some great managers you just need a service like morningstar to help pick them.[/reply]

So you're saying you are one of these elite few? being able to time the market and all...

I like Bernstein. Bogle is a little too basic, but great for beginners.



I prefer the texts of value investors though.

Of course not.....would I be sitting here writing pointless commentaries on an obscure web forum just to amuse myself if I was?Now whats your excuse?

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non illigitamus carborundum

Ah, investment bankers lead sad lives (debatable). Well not claiming I have what it takes, 90-120hrs a week, no thanks. I'd rather just buy, hold, and do something interesting with my time.

Actually I do about 35 hrs a week(some from home )and believe me....99.9 % of investment bankers are like 99.9 % of any other industry(think actors,authors e.t.c)...we only ever hear about the successful ones and extrapolate from that.As for Bogle et al....not taking away from the man but starting a mutual fund business at a generational low in the dow ?(1974)not too many would have failed to make money investing then......try 'fooled by randomness' by Taleb;good book....and yes i am jealous I wasn't around in 1974 to take advantage....now had he been a year earlier/later????????

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non illigitamus carborundum

'you only lose when you sell?'so hes trying to tell me that if I sold s&p futures this morning (its down 1.15% as we speak)I wouldn't be making money?

Oooh... you are the bright one. "You only lose when you sell" is not the same as, "every time you sell, you lose." What I'm saying is that you only take losses when you sell. If you hold, you don't lose.

Oh and the usual broker crap about 20 year time horizons for small investors!!Why should we judge the market /individual stocks on a 20 year horizon when institutional (read 'professional' supposedly although the money they use is the money you invested with a 20 year horizon)are buying and selling based on companies either meeting or not as the case may be QUARTERLY(yes thats approximately 90 days)forecasts.

Huh. That's curious. So you're saying that a "young guy" dealing with his retirement assets should be judging their performance quarterly, because that's what institutional (you never said what the "institutional" were) somethings are doing?

Maybe you're right, he should keep trying to time the market (which only you can do, apparently) and underperform the market by 50%, like everyone else does.

Better yet, he should go hire a professional/do the research and figure out what he thinks is his best path, instead of trying to get financial advice from a triathlon forum (albeit off topic).

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Father Kevin

http://www.churchofcycling.org

If you hold, you don't lose.

Unless the company goes belly up. (I suppose it isn't much of a risk for most mutual funds, though.)

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"People think it must be fun to be a super genius, but they don't realize how hard it is to put up with all the idiots in the world."

I should have continued that thought. If you own a diversified portfolio (I'm not much for mutual funds, I prefer ETF's), you only lose when you sell. Of course, if you're gambling and buying individual companies, they can always go to zero. For that, I prefer Vegas. They give you free drinks.

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Father Kevin

http://www.churchofcycling.org

My point about the time horizons was simply to point out the disconnect between what the army of brokers tell their clients and how the actual portfolio managers 'manage' the portfolio.If you read it properly you would see that, and also see that I was not suggesting whether or not either one was suitable,it all depends on the circumstances.As for the laughable phrase about not losing if you don't sell presumably your advice to the enron ,worldcom etc shareholders a few years back would have been to hold rather than realise their losses and maybe salvage something?Like I said before there are some good mainstream brokers/advisors out there but there is no harm in taking decisions of your own about your portfolio and if you think its going down in the next 6 months and have a strong conviction based on sound ideas you would be an idiot not to sell/hedge looking for better levels to buy.

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non illigitamus carborundum

Nice selective reading.

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Father Kevin

http://www.churchofcycling.org