>> The DOW started the decade near 3000. When it peaked at 9300, the average
investor had over a triple, or a 200% total return. Now it is back to 7500. The average
investor is still up about 150% in 8 years, which equates to a better than 12% annual
return. Please note that you said 43% of PROFITS, not investment dollars.<<
not necessarily true. i'd say much much less than 1% of market participants - maybe 1 in 10,000 - had 100% of their money in the market in 1990 and DID NOT ADD. that is your assumption in the above statement and it only applies, i think we can agree, to very, very few people. not a good way to prove a point, imho ;-)
the bottom line is that it takes MUCH MORE MONEY to support 9300 than 3000. therefore, MUCH MORE MONEY MUST HAVE FLOWED IN to support 9300. probably 4-5-10 times as much as was needed to support 3000 as the market is much more popular now and volumes are much, much higher. therefore, it is top weighted at the top. more money must flow in at the top than the bottom. much, much more. again, you overlooked this fact.
i'll agree that 43% seems kind of high. i want to look over the article before deciding, though. just put it out as a point of interest.
>>Long term investors have not "lost" anything any more than they "gained" over the
previous 7 years. Last time I checked, I still own the same shares of stock I owned
before the market dropped and I have the same rights to the profits of the
businesses that I own. The market could continue to go down or go up, frankly I
don't care for the next 20+ years. The only time that I want the market to be high is
when I am about to sell which is somewhere around 2020 when I hope to retire. In
the interim, I am happy to see it go down as the "new" money I am investing buys
more.<<
they most certainly have lost something of late just like they earned something the prior 7 years. the right to sell a stock at a given price. they may choose to exercise or not exercise this right. however, it is very tangible and very meaningful. we do agree the most important price is when you sell :-) for many people, though, they don't sell according to plan as life is what happens to you when you're planning something else ;-)
>>As for the long term buy and hold being foolish - I'm sure the Motley Fools
would agree. If you are trying to be critical of the method, please call Warren
Buffet, Peter Lynch, and others, and explain to them how silly they were, and still
are, to not follow the skeeter bug method of investing.<<
buffet is portrayed as a buy and holder. is buffet still into airlines? ;-) i think the operative word is "s-o-l-d." ;-)
didn't he also own a majority of disney before he s-o-l-d it? ;-)
the bottom line is that buffet can't be compared to any individual investor. a lot of his success is taking businesses private and, in addition, having a lot of say in how a company is run. he has major clout and influence. he can work with management, talk with management and, in some cases, control management.
he is also a value investor. he doesn't support the buy and hold mantra that says, heck, buy any good company and hold it and you'll get rich. he buys good companies when they are CHEAP. if they are expensive then he doesn't touch them. you have a similar philosophy that i think is prudent but lots of people don't get the concept and, in effect, pay $40k for a corolla. GREAT car. WAY, WAY overpriced.
i'm differentiating between the two b/c the buy at any valuation and hold crowd is awful large and very unhealthy. the motley fool is a joke. they have been successful b/c they have been long in a bull market. if we see a bear market then they will get wiped out. as will their followers. lots of guru's are being exposed for adding little more value than a monkey with a buy button in front of it or a parrot that says "buy, buy, buy" over and over.
btw, what other stocks do you like?
i like genzl, gztc, lgnd, trps, mwy, asis and swtx. they have all been beat down pretty badly and appear to me to have excellent reward potential. i've been long and wrong on these bow wow so far, though. i can't wait until the buy high, sell low crowd stops selling. i look forward to selling back to them at greatly increased prices. ;-)
as an aside, i see tons of value in this market. i also see a "nifty fifty" type disconnect where the few popular companies are way overvalued. when they crash, if they crash (and i think they will), it may make the other value stocks into incredible values as long as they stay in business. it will be interesting.
good luck. |
