Hi Dave,
Interesting post. I have never denied that there are stocks that seem to go straight up. VTSS is certainly not one of them. Have you seen the ad by the mutual fund company that states that if you had invested $10000 with them in 1950 or so you would have over 7 million today.
Since you used VTSS as an example I will do the same:
In September 1994, VTSS sold for a split adjusted price of $1.7083. If you had started an AIM account with $10,000 in 1994 using 50% cash, 10% BUY SAFE, 10% SELL SAFE, $1,000 minimum trade and 10 shares as minimum trade, then you would have ended the 5 year period with:
118 shares of VTSS worth $8247, $27,705 in cash for a total of $35,592
If instead you had put 100% of you nestegg in VTSS and not touched it for 5 years, you would own 5,854 shares of VTSS worth $409,032 almost a 10 fold increase in performance over 5 years by simply holding your breath and doing NOTHING.
10000 invested in 1994 would have grown to 27,805 by 9/1/96.
This would have shrunk to 21707 by 11/1/96 (-22%).
Would have grown to 107073 by 1/1/97
Would have shrunk to 81829 by 2/1/97 (-24%) in 30 days
Would have grown to 145061 by 8/1/97
Would have shrunk to 110448 by 1/1/98 (-24%)
Would have grown to 192439 by 7/1/98
Would have shrunk to 138293 by 9/1/98 (-28%)in 60 days
I believe the experts on Wall Street call 10% decreases a correction. You tell me that a stockt hat has experienced four "corrections" in a two year period of time, greater than 20% went straight up and I say Hogwash. SCH has had several dips greater than 20%. HWP dropped 40% in one 4 month period in 1998. From April to July of this year AMZN dropped 42%. I'm not saying these are bad stocks, but please don't say that they have gone straight up. My definition of straight up is that it doesn't go down. I will repeat what I have said before. AIM is a risk management tool. I wonder if you would have had the balls to watch $200000 shrink to $120000 over a 3 or 4 month period of time without junping off.
Bernie |
