options (finance)

[FakeKramer]

Wow there are a lot of uneducated, misinformed people in this thread pretending to be educated and informed.

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Easy. Say I have 100 dollars. I keep the dollars as currency in a standard savings account for the period of the bull market. I earn X amount interest but the dollar has lost Y value.

Alternatively I invest that 100 dollars in the DOW at the start of the five year bull period, I show much better returns than the above example even accounting for dollar devaluation. Thus by putting $ into the DOW I have shown much much better returns than had I left my $ as $. This would not be the case had the market been bear.

I cant actually believe I am having this conversation.If you think the last 5 years have been a bear market you are in for some very rude awakenings. The idea that the last 5 years have been a bear market are at best just uninformed but at worst totally retarded.

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Bingo

[crashjr]

[ QUOTE ]
Wow there are a lot of uneducated, misinformed people in this thread pretending to be educated and informed.

[ QUOTE ]

Easy. Say I have 100 dollars. I keep the dollars as currency in a standard savings account for the period of the bull market. I earn X amount interest but the dollar has lost Y value.

Alternatively I invest that 100 dollars in the DOW at the start of the five year bull period, I show much better returns than the above example even accounting for dollar devaluation. Thus by putting $ into the DOW I have shown much much better returns than had I left my $ as $. This would not be the case had the market been bear.

I cant actually believe I am having this conversation.If you think the last 5 years have been a bear market you are in for some very rude awakenings. The idea that the last 5 years have been a bear market are at best just uninformed but at worst totally retarded.

[/ QUOTE ]

Bingo

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Those saying that the decline of the dollar relative to other currencies should be taken into account when comparing the market's overall return are not uneducated and misinformed, they just are not terribly good at making the point.

The point:

Merely by the act of holding dollars and operating in dollars, an investor (or anyone for that matter) is speculating in currency markets. In recent months, one major cost of trading in investment vehicles denominated in US dollars is the fall of the dollar relative to other currencies. The investments lose relative value just as the dollar does.

To be sure, calling the recent state of the US equities market a bear market is not accurate because the market has been expanding in a period of relative deflation. But the point that the relative decline of the US dollar should be taken into account when judging performance of an investment vehicle is a valid one and should not be dismissed out of hand.