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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (51233)	5/5/2002 12:31:31 PM
From: the dodger	Read Replies (2) \| Respond to of 54805

'Buy-and-hold' stock strategy may be outdated, analysts say I love "We're all gonna die!!!" articles like that - The Mercury News' Dave Sylvester states... "Right now, among the S&P 500 stocks, the biggest and strongest American corporations, half are trading at the same prices of 1997, producing five years of no gain." Yep - that's fairly true - but that's only if you had all your $$$ in just the HALF of the S&P500 that's flat, or if you measure the entire S&P500 performance from the END of 1997. (The S&P500 closed 1997 at 970 - and currently stands at 1073...which I agree would be a stingy 2.55% annualized gain.) However... If you tip-toe back just a smidgeon further - to let's say the BEGINNING of 1997 - where the S&P500 STARTED the year at 740 - that would represent more like a 9.73% annualized gain. Quite a different picture. (What a difference a few days make!) And if you step back just a little bit further - to let's say the beginning of 1995 - where the "tech bubble" began - the picture is even brighter for the vast majority of components making up the S&P500. At the beginning of 1995, the "info tech" sector made up 12.4% of the SP500's total market value (459) - or some 56 points. So that left the rest of the S&P500 with a valuation of about 403 points. Today, the "info tech" sector is worth about 165 points (or 15.4%) of the total SP500 value...which means the S&P500 excluding the info-tech sector is now worth about 908 points. That represents an annualized return of over 10.6%. And even if you had ALL you $$$ in the info-tech sector - despite the tremendous correction that's occurred in that sector the last two years - you too would have done quite well - better actually - roughly tripling your money - just as long as you had put your $$$ in pre-1995. The point is, as long as you didn't enter the market late - like maybe the late nineties - and then wildly speculate by putting all or most or all of your eggs in that lone info-tech sector basket, you've probably done reasonably well over all. Have you noticed a pattern here? Have you noticed that the FURTHER BACK you go...the LONGER the TERM...the BRIGHTER the view?! The point is, it's really the short-term trader/speculator that got stung by the correction - and not the long-term buy-and-hold investor. the dodger PS - GOOD NEWS! MAYBE! - the "bear"may FINALLY be ready to go into hibernation! I keep a long-term chart (it goes back to the early seventies) for the sole purpose of when to generally commit new $$$ to the market - and it just recently gave off it's first "buy" signal in over SEVEN years!