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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Boyd Hinds who wrote (13899)	2/10/2002 9:31:15 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78673

Boyd Hines, what those charts seem to show is that if you're in the market, you'd better plan to be in for 20-25 years or more if you want to assure yourself that you can beat inflation with stocks. And according to that research, regardless if it is by a one-time buy of either category, or by annual investments in either category. These studies and media reports of whether it's large-cap or small-cap stocks that the better investment are on-going, year after year. To my mind, the long-term investor is better served by selecting from both categories rather than choosing one over the other. Paul Senior jmo

To: Boyd Hinds who wrote (13899)	2/12/2002 12:22:06 AM
From: Don Earl	Read Replies (1) \| Respond to of 78673

I wouldn't bet the farm on that study. Using indexes such as the S&P 500 is pretty much useless. The only thing you can be sure of is the 500 stocks in the index in 1926 is NOT the same 500 stocks in the index today. A more interesting study would be to go back 20-30 years and see how many of the companies in the small vs. large are still in business. My guess is the portfolio would consist of Dow 30 stocks because all the rest of the stocks had been canceled. Delete ENE & KM from the index and move up the two highest market caps from the mid cap index. IMO, any portfolio intended to be held for that length of time has to be based on the potential of the company to still be in business after that length of time. The indexes don't take a loss when one stock is dropped and another added, individual investors do. Assuming a 30 year time frame is targeting retirement, the only possible strategy I can think of that would make sense is to put the money in a mutual fund based on the Dow. The chances of IBM being around in 30 years strikes me as being a lot better than the chances of Brand X still being able to carve out their $100 million a year niche market. Personally, I'm rather fond of small caps, but I wouldn't dream of owning one for 30 years.