Betting on another 911

[kimchi]

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Nikkei-225 1987-2007, DJIA 1929-1954, 1966-1982. And those were *nominal* declines, which is insanely awful over a stretch that long. You'd note that on an inflation-adjusted basis, DJIA had an unbelievably awful stretch from 1929 to 1982 as well. It merely doubled from the high in 1929 to the low in 1982 over the course of 53 years, far lagging behind inflation.


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I think those periods exclude dividends, which offset or cancel the effects of inflation.

There's a good chance that 2000 - ? will be a rediculously long stretch (inflation adjusted) too.

[Fishhead24]

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Where do you want it, Fish? Under my mattress in cold hard cash?

Anyone that's under age 40 that has less than 60% of their retirement/savings/long term money not in the stock market is an idiot, IMO. Unless you're within 5-8 years of retirement, THE STOCK MARKET IS NOT A SHORT TERM/TIMING GAME.

I'm in my 20s and have 75% of my money in the market. The sky is not falling. This has happened millions of times over the last 80 years, and it has been consistently proven time and time again that the people who left their money in through fluctuations come out on top on almost any long term time period you can quote (any 10 year period, any 20 year period, etc).

Keep pulling it out, get taxed, and reinvest if you want to "when you think it's safe", I'll leave my money in, compound interest, get taxed at the long term capital gains rate, and not worry the Dow dropped 300 points today and gained 280 tomorrow.

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Let me ask you this, how long has the stock market in the United States been in existance?????

You may think it has been a long time, but in the grand scheme of things it has not.

PAST PERFORMANCE does not guarantee future performance.

Make no mistake about it, the stock market could crumble and not recover to its all-time high for 15-25 years.........which is ok I guess if your under 30 years old. If over 38, no way would I recommend having over 50% of my money in this market.......NO WAY.

There are numerous investments better than the stock market if one investigates.

[Fishhead24]

On August 24, 1921, the Dow Jones Industrial Average stood at a value of 63.9. By September 3, 1929, it had risen more than sixfold, touching 381.2.

It would not regain this level for another twenty five years!!!

[PRE]

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Where do you want it, Fish? Under my mattress in cold hard cash?

Anyone that's under age 40 that has less than 60% of their retirement/savings/long term money not in the stock market is an idiot, IMO. Unless you're within 5-8 years of retirement, THE STOCK MARKET IS NOT A SHORT TERM/TIMING GAME.

I'm in my 20s and have 75% of my money in the market. The sky is not falling. This has happened millions of times over the last 80 years, and it has been consistently proven time and time again that the people who left their money in through fluctuations come out on top on almost any long term time period you can quote (any 10 year period, any 20 year period, etc).

Keep pulling it out, get taxed, and reinvest if you want to "when you think it's safe", I'll leave my money in, compound interest, get taxed at the long term capital gains rate, and not worry the Dow dropped 300 points today and gained 280 tomorrow.

[/ QUOTE ]

Let me ask you this, how long has the stock market in the United States been in existance?????

You may think it has been a long time, but in the grand scheme of things it has not.

PAST PERFORMANCE does not guarantee future performance.

Make no mistake about it, the stock market could crumble and not recover to its all-time high for 15-25 years.........which is ok I guess if your under 30 years old. If over 38, no way would I recommend having over 50% of my money in this market.......NO WAY.

There are numerous investments better than the stock market if one investigates.



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Ummmm, no

[Jimbo232]

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On August 24, 1921, the Dow Jones Industrial Average stood at a value of 63.9. By September 3, 1929, it had risen more than sixfold, touching 381.2.

It would not regain this level for another twenty five years!!!

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Fish, I think this example serves as a great point for how risky equity investments have the potential to be - I think after long periods of positive returns people often get complacive and expect a great ROI from the market.

I think this example falls short in practical application though. In reality, most passive investors are simply DCA'ing funds into the market every 2 weeks as they get paid via their 401K's, 403B's, TSP's, IRA's, etc. Very few people are moving all of their savings into the market at 1 time and waiting 25 years to breakeven. More likely, they are buying a greater number of shares as the market is declining (cheaper prices) and as the market begins to turn upwards the cheapest shares begin to return positive results first and they ride the wave back up. After 25 years the very small % of their total portfolio that was bought at the peak will break even, but by this time the other 99% of their portfolio will be showing great returns making this 25 year period from peak to peak somewhat irrelevant to an average investor.

[Fishhead24]

I just dont like the way some investors point to the past when referring to the stock market as a "cant lose" proposition as if they can base this on 1000+ years of past evidence.

Hell, only 100 years ago the stock market was "illegal gambling" in the minds of many.........think about it.

Everybody has an opinion and that is what makes a market..........it is my opinion at this time that it is absolutely absurd to have a majority of ones funds in the stock market.......especially if your over 40 years of age.

[Phone Booth]

[ QUOTE ]

I think this example falls short in practical application though. In reality, most passive investors are simply DCA'ing funds into the market every 2 weeks as they get paid via their 401K's, 403B's, TSP's, IRA's, etc. Very few people are moving all of their savings into the market at 1 time and waiting 25 years to breakeven. More likely, they are buying a greater number of shares as the market is declining (cheaper prices) and as the market begins to turn upwards the cheapest shares begin to return positive results first and they ride the wave back up. After 25 years the very small % of their total portfolio that was bought at the peak will break even, but by this time the other 99% of their portfolio will be showing great returns making this 25 year period from peak to peak somewhat irrelevant to an average investor.

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Actually most people pull their money out long before the market reverses its decline and that's why declines last as long as they do and valuations reach extremes. You'd have to have a lot of confidence and knowledge to stick through the bad times - which most of the "stocks always go up in the long run" crowd don't have. Long into the decline, they'll start falling for "home prices never go down," "they ain't making more land," or some other slogan. And what you're advocating is a form of market timing, buying more when things are cheap and less when things are expensive, which I do endorse.

[Jimbo232]

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[ QUOTE ]

I think this example falls short in practical application though. In reality, most passive investors are simply DCA'ing funds into the market every 2 weeks as they get paid via their 401K's, 403B's, TSP's, IRA's, etc. Very few people are moving all of their savings into the market at 1 time and waiting 25 years to breakeven. More likely, they are buying a greater number of shares as the market is declining (cheaper prices) and as the market begins to turn upwards the cheapest shares begin to return positive results first and they ride the wave back up. After 25 years the very small % of their total portfolio that was bought at the peak will break even, but by this time the other 99% of their portfolio will be showing great returns making this 25 year period from peak to peak somewhat irrelevant to an average investor.

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Actually most people pull their money out long before the market reverses its decline and that's why declines last as long as they do and valuations reach extremes. You'd have to have a lot of confidence and knowledge to stick through the bad times - which most of the "stocks always go up in the long run" crowd don't have. Long into the decline, they'll start falling for "home prices never go down," "they ain't making more land," or some other slogan. And what you're advocating is a form of market timing, buying more when things are cheap and less when things are expensive, which I do endorse.

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I guess maybe I am giving the "average" investor too much credit here, but I just kind of assume most people have their 401K, IRA, etc. contributions on auto-pilot and will just keep pumping in X% of their salary whether the market is going up or down. I guess it is realistic to assume some investors will panic and pull their money out once things get ugly.

I definitely don't think I was advocating any sort of market timing, I was actually suggesting contribute X% of salary every 2 weeks regardless of market performance. If you remain constant in your DCA'ing in both good times and bad times, the result will be that you are able to purchase more shares as the market declines with the same amount of money contributed because prices are cheaper. This will help make the 25 year break-even stretch somewhat negligent because only a very small % of your portfolio will be purchased at the actual peak price.

[APXG]

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How can anyone have over 60% of their investment funds in the U.S. stock market at this time.

Are they nuts?

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Just short the XLF for half of that 60%, and you should be fine [img]/images/graemlins/wink.gif[/img]

[PokerFox]

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Where do you want it, Fish? Under my mattress in cold hard cash?

Anyone that's under age 40 that has less than 60% of their retirement/savings/long term money not in the stock market is an idiot, IMO. Unless you're within 5-8 years of retirement, THE STOCK MARKET IS NOT A SHORT TERM/TIMING GAME.

I'm in my 20s and have 75% of my money in the market. The sky is not falling. This has happened millions of times over the last 80 years, and it has been consistently proven time and time again that the people who left their money in through fluctuations come out on top on almost any long term time period you can quote (any 10 year period, any 20 year period, etc).

Keep pulling it out, get taxed, and reinvest if you want to "when you think it's safe", I'll leave my money in, compound interest, get taxed at the long term capital gains rate, and not worry the Dow dropped 300 points today and gained 280 tomorrow.

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PAST PERFORMANCE does not guarantee future performance.



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People have been screaming this for 70+ years about the market, and guess what? Every time, they are proved wrong.
S&P 500 returns (off the top of my head) have averaged between 8-11% a year for the last 60 years, but if you think the stock market is a losing proposition, by all means don't let me dissuade you.