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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (28787)	3/3/1999 12:43:00 PM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 70976

>>But even taking your inflation rate since 1982, you still get 9.3 x 0.2 (should be 0.15 but I'm being generous here) x 0.57 (your inflation rate) and AT BEST you get 1.06 or a 6% gain in 33 years (excluding dividends). This is the average annual gain of only 0.1%. This is far less than what the public is told and is certainly not worth the risks.<< Isn't it? Does any other investment do any better? If stocks deliver 0.1%, but everything else delivers -10%, then stocks look like a pretty darn good investment to me. Katherine

To: Sun Tzu who wrote (28787)	3/3/1999 2:57:00 PM
From: Clarksterh	Read Replies (2) \| Respond to of 70976

Sun - First of all, you did lose 75% to inflation during the 70s and over 80% in you go from 1966 to 1982. Well, I'll site my sources: One of the best books on the basics of investment "Investment" by Bodie, Kane, and Marcus and fintrend.com Both produce exactly the same figures - 206% inflation from beginning of 1966 to end of 1982. I suggest you check your sources to make sure that they aren't citing education or some other sector which has outpaced inflation. If Rome had a stock market, 200 BC to 200 AD would have been one hell of a bear market. Of course, if you waited 2000 years, then you're ok <G>. Except that GDP's prior to the technology age stagnated, and thus, in the era before technology, stock markets were a zero sum game. Now they are not. <<smaller companies tend to have correspondingly higher rates of return on average to 'adjust' for that risk.>> This is another popular myth. Read James O'Shaunessy's What works on Wall ST. He did a thorough research of the stock market since the turn of the century. It turns out that that statement applies only to the bottom 10% of the market capitalization (companies that have under 20 million market cap). Well, I agree that in this arena we are getting into the area where the statistics are complicated enough that it is easy to make them lie. It would take too long to defend the thesis, so I won't try here. Clark