Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who wrote (827)	11/21/2000 1:48:42 PM
From: Joshua Corbin	Read Replies (1) of 74559

Well if the bull market is not going to be back for 10 years then you are better off buying bonds. Correct, but why should I only hold for ten years? Edgar Lawrence Smith wrote a book called Common Stocks as Long-Term Investments, pointing out that stocks beat bonds over the long haul. He was a Wall Street hero in 1929 and a goat all through the 1930s. Looking back, he was right. You claim you never know what the market is going to do so you can't make any decisions. At any momment, the price of any stock represents the fair market value negotiated between buyers and sellers. This is true even though the market is no more rational or efficient than the people making the deal. An overvalued stock can get more overvalued and an undervalued stock can get more undervalued. You sound like you are gambling if you invest and say you have no idea what your stocks are going to do I didn't say that. I look for good companies at good prices. And I do not consider indexes a soft option. You're the speculator, not me. These stocks will never come up despite your mantra that stocks trend up in the long run. You're talking about individual stocks in comparison to the overall direction of the market. Not to mention that many of yesteryear's heavily hyped Go-Go companies are alive and well. Ever heard of Avon? IBM? According to this, "Between December 1972 and June 1997, the Nifty Fifty generated a compound annual return (CAR) of 12.4%, without re-balancing the portfolio." fool.com Looks like up to me. Granted, this group slightly under-performed the market (by 0.3 percent, less than most expense ratios), but it illustrates my point.

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