Comments on: Why Stocks Are for the LONG Term http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Sat, 11 Feb 2012 20:32:19 +0000 hourly 1 http://wordpress.org/?v= By: Model dlya sborki http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-341974 Model dlya sborki Sat, 02 Aug 2008 17:44:09 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-341974 It is really inspiration and calming in these turbulent times. It is really inspiration and calming in these turbulent times.

]]> By: Invest in stocks http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-312245 Invest in stocks Wed, 21 May 2008 09:02:15 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-312245 The risk of losing money in the stock market cannot be eliminated; it can however be minimized. Which is the best time to buy stocks? Always invest in stocks when the market price is less than the intrinsic value of a stock. The risk of losing money in the stock market cannot be eliminated; it can however be minimized. Which is the best time to buy stocks? Always invest in stocks when the market price is less than the intrinsic value of a stock.

]]> By: Bozo http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-308199 Bozo Tue, 13 May 2008 12:46:49 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-308199 Written in August of 2005, this article is must reading for anyone long in the stock market: http://www.zealllc.com/2005/longwave2.htm The author's thesis, backed by statistics and historical analysis, is that we are currently (and will be) in a secular bear market until 2017 (from the tippy-top in 2000). We may have cyclical (shorter-term) bull and bear markets within that period (as we have seen), but the odds are another great bull (as from 1982 - 2000) won't be here until, you read it correctly, 2017. Long term means, LONG term, folks. Yours, Bozo Written in August of 2005, this article is must reading for anyone long in the stock market:

http://www.zealllc.com/2005/longwave2.htm

The author’s thesis, backed by statistics and historical analysis, is that we are currently (and will be) in a secular bear market until 2017 (from the tippy-top in 2000). We may have cyclical (shorter-term) bull and bear markets within that period (as we have seen), but the odds are another great bull (as from 1982 – 2000) won’t be here until, you read it correctly, 2017.

Long term means, LONG term, folks.

Yours,

Bozo

]]> By: Dave2 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-306753 Dave2 Fri, 09 May 2008 14:27:03 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-306753 You can check S&P500 return, both adjusted and unadjusted for inflation, and both with and without dividend reinvestment at http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html As far as the "super bubble" theory mentioned above, note that the S&P is currently trading at about its historical P/E ratio, and dividend yield is also in line with historical levels. That was not the case during the "internet bubble" of the late 90's. You can check S&P500 return, both adjusted and unadjusted for inflation, and both with and without dividend reinvestment at

http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html

As far as the “super bubble” theory mentioned above, note that the S&P is currently trading at about its historical P/E ratio, and dividend yield is also in line with historical levels. That was not the case during the “internet bubble” of the late 90′s.

]]> By: bob http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-306604 bob Fri, 09 May 2008 04:31:09 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-306604 I'm sure that no one wants to hear from an ultra, ultra financial conservative, but here goes... Despite my missing the "average" return, I sleep pretty well, 'cuz I have 0 dollars invested in other than I Bonds. At age 72, even a five year plan is too long. I buy into what George Soros has to say about the economy and (by implication) the stock market. We're into a once in a lifetime "super bubble" which includes all of the words you've heard in the past year... SIV CDO Credit Derivatives Housing Bubble Commodity Oil Ethanol Fiat Money Hedge Fund Inflation etc etc..... There just isn't any "new bubble" to fill in for the huge deficit. Despite Mr. Bernancke's jawboning, there isn't any way out. The banks and brokerages will eventually have to "mark to market" all those mysterious acronyms that they are holding. Can anyone explain a $537 Trillion derivative notional value??? Sooooo.... while I know I'm gonna go down the drain with hyperinflation, at least it won't be because I'm watching and worrying that my investments will do worse than the inflationary percent. As Mr Soros implies... we may have to throw out investment history, when we're dealt with the storm of the century. I’m sure that no one wants to hear from an ultra, ultra financial conservative, but here goes…

Despite my missing the “average” return, I sleep pretty well, ‘cuz I have 0 dollars invested in other than I Bonds. At age 72, even a five year plan is too long.

I buy into what George Soros has to say about the economy and (by implication) the stock market.

We’re into a once in a lifetime “super bubble” which includes all of the words you’ve heard in the past year…
SIV CDO Credit Derivatives Housing Bubble Commodity Oil Ethanol Fiat Money Hedge Fund Inflation etc etc…..

There just isn’t any “new bubble” to fill in for the huge deficit. Despite Mr. Bernancke’s jawboning, there isn’t any way out. The banks and brokerages will eventually have to “mark to market” all those mysterious acronyms that they are holding.

Can anyone explain a $537 Trillion derivative notional value???

Sooooo…. while I know I’m gonna go down the drain with hyperinflation, at least it won’t be because I’m watching and worrying that my investments will do worse than the inflationary percent.

As Mr Soros implies… we may have to throw out investment history, when we’re dealt with the storm of the century.

]]> By: Meg http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-306069 Meg Thu, 08 May 2008 03:02:16 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-306069 Jeremy - good point about dollar cost averaging; I am not sure how to find or compile that data, but I might have to look into it! As for dividend reinvestment, I'm not sure if or how that's taken into account on these performance charts; is it really not factored in at all? In that case an investor would have certainly done better than what's reflected above. It's hard to separate increases from adding more money vs increases from market gains when you're investing money all the time. Plus since you don't usually pay taxes directly from your investment account, many people never see how that lowers your actual return. Vanguard does a cool thing on its website; it shows on a line graph two trend lines: one for how much you've contributed and one for market value (you can look at this by account, by holding, or for your total investments). I actually have several index funds with Vanguard that I've regularly contributed to for years (more than 5 but less than 10). Those lines aren't actually that far apart (yet)! Though my market value IS higher than what I've contributed so far; and hopefully those lines will grow ever farther apart. Jeremy – good point about dollar cost averaging; I am not sure how to find or compile that data, but I might have to look into it! As for dividend reinvestment, I’m not sure if or how that’s taken into account on these performance charts; is it really not factored in at all? In that case an investor would have certainly done better than what’s reflected above.

It’s hard to separate increases from adding more money vs increases from market gains when you’re investing money all the time. Plus since you don’t usually pay taxes directly from your investment account, many people never see how that lowers your actual return.

Vanguard does a cool thing on its website; it shows on a line graph two trend lines: one for how much you’ve contributed and one for market value (you can look at this by account, by holding, or for your total investments).

I actually have several index funds with Vanguard that I’ve regularly contributed to for years (more than 5 but less than 10). Those lines aren’t actually that far apart (yet)! Though my market value IS higher than what I’ve contributed so far; and hopefully those lines will grow ever farther apart.

]]> By: Brice Hogan http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-306015 Brice Hogan Wed, 07 May 2008 23:47:13 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-306015 I absolutely agree with this line of thinking. Stocks will always return a positive number over a long period of time. For 20 year periods since 1929 stocks have had positive returns in all 20 of those years. My investing hero warren buffet must be pretty smart because he has held stocks for a long time. Over that time he has been able to amass a fortune by holding to two very important concepts: 1 Hold for the long term. 2.Annualized compound returns. If he has done it it might be wise to listen. I absolutely agree with this line of thinking. Stocks will always return a positive number over a long period of time. For 20 year periods since 1929 stocks have had positive returns in all 20 of those years.

My investing hero warren buffet must be pretty smart because he has held stocks for a long time. Over that time he has been able to amass a fortune by holding to two very important concepts: 1 Hold for the long term. 2.Annualized compound returns. If he has done it it might be wise to listen.

]]> By: Shaun Rosenberg http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-306001 Shaun Rosenberg Wed, 07 May 2008 23:03:02 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-306001 I agree that stocks are for the long term, but I don't agree that you should hold stocks forever. Anyone should be able to outperform the SPY every year by trading. Especially considering you can make money (instead of losing money) when stocks go down. http://www.stocks-simplified.com I agree that stocks are for the long term, but I don’t agree that you should hold stocks forever. Anyone should be able to outperform the SPY every year by trading. Especially considering you can make money (instead of losing money) when stocks go down.

http://www.stocks-simplified.com

]]> By: Jeremy http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-305865 Jeremy Wed, 07 May 2008 16:17:15 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-305865 Also, just to clarify, if someone did buy an index fund 10 years ago and just held it, they actually would have done quite a bit better than breaking even, provided the dividends were reinvested (which is usually the case). So even though the value of the index such as the S&P may be not showing very good returns over the past 10 years, someone who was invested in say, VFINX and reinvested the dividends and such would actually be up around 60% over since 1998. It can be a bit misleading when looking at the raw numbers, since real world factors like this can illustrate that things are better off than what the numbers might otherwise show. Also, just to clarify, if someone did buy an index fund 10 years ago and just held it, they actually would have done quite a bit better than breaking even, provided the dividends were reinvested (which is usually the case).

So even though the value of the index such as the S&P may be not showing very good returns over the past 10 years, someone who was invested in say, VFINX and reinvested the dividends and such would actually be up around 60% over since 1998.

It can be a bit misleading when looking at the raw numbers, since real world factors like this can illustrate that things are better off than what the numbers might otherwise show.

]]> By: Jeremy http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/comment-page-1/#comment-305860 Jeremy Wed, 07 May 2008 16:04:15 +0000 http://allfinancialmatters.com/2008/05/07/why-stocks-are-for-the-long-term/#comment-305860 In absolute terms, yes, the indicies are not very exciting. But, out of curiosity, what would the real world returns look like for someone during the same time frame? What I mean, is most people didn't make a lump sum investment in 1998, and have held it for 10 years. Most people invest small amounts over regular intervals, such as with their 401ks and such. So, given we've seen some significant ups and downs over the past 10 years, what effect did dollar cost averaging have on total returns over this period? Did it improve an investor's returns, make no difference, or perform worse over this 10 year period? That would be an interesting spreadsheet for JLP to put together :) In absolute terms, yes, the indicies are not very exciting. But, out of curiosity, what would the real world returns look like for someone during the same time frame? What I mean, is most people didn’t make a lump sum investment in 1998, and have held it for 10 years. Most people invest small amounts over regular intervals, such as with their 401ks and such.

So, given we’ve seen some significant ups and downs over the past 10 years, what effect did dollar cost averaging have on total returns over this period? Did it improve an investor’s returns, make no difference, or perform worse over this 10 year period?

That would be an interesting spreadsheet for JLP to put together :)

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