Dow to close 2011 at 13,000 or above

Further, your returns need to be time weighted. if you contribute an average of $20k/yr over 23 yrs, your average return is the midpoint.e.g. for DCA with the S&P 500 assuming 2% dividends reinvested, your real return is 4%. and you are claiming 10%. So you are the best portfolio manager that has ever existed, and Wall Street has been looking for you for 100 years......It is simply not possible to outperform a benchmark by 600bps EVERY YEAR for 2 decades, using mutual funds and dollar cost averaging. You are severely miscalculating your returns.

1) You can go buy all 30 stocks if you like.2) The returns ARE possible...I'm NOT including any matching I've ever had. I've had a whole bunch of different mutual funds over the time period in question, and my spreadsheet doesn't lie.3) My returns are quite reasonable to the point of being almost conservative (though I will admit they are better than conservative). If you ever listen to Dave Ramsey, he talks of 12-14% annual return with mutual funds. I don't know how or why he gets those numbers, because that's not my experience, but that's his mantra.4) I'm aware to the penny how much money I'm putting in.

Derek Smalls wrote:

You cannot, "buy the Dow". It is a price weighted index. If there are 2 stocks in the dow, A $90, B $10, then A =90%, B = %10. And this changes every day. So beating it is basically beating a few stocks in the index e.g. 2011 you beat the dow because you owned IBM and MCD. No other way.

The actual returns Flagpole suggest are just not possible given his strategy. His returns are lower and he is putting in a lot more money than he may be aware of. And/or he is not counting matching contributions in his 401k. Something is not kosher.

Are you using time weighted returns?

Derek Smalls wrote:

You cannot, "buy the Dow". It is a price weighted index.

Flagpole wrote:

1) You can go buy all 30 stocks if you like.

this will not mimic the Dow. The weight of each stock in the dow is determined by its price. Whereas the market cap of names in the S&P500 determines their weight, and thereby allows passive investors to mimic the index with zero turnover, to mimic the Dow you would have to reweight your holdings every day.

If you hold an even weighted naive portfolio of the Dow names, this will not generate the same returns as the Dow. A market cap weighting would probably give you something akin to the S&P500.

Derek Smalls wrote:

Are you using time weighted returns?

Can you make it go?

Derek Smalls wrote:

Are you using time weighted returns?

Know that I'm continuing with you because to me your disbelief is hilarious.

I invest in Vanguard and Fidelity retirement accounts mostly along with a non-retirement mutual fund (which was FLAT in 2011) and a Money Market Account. The vast majority of my stuff is with Vanguard and Fidelity.

Knowing that I'm BIG on dividends and SOUR on precious metals and mining stocks, note the big trends for 2011 in those types of investments...

All for 2011

Dividends:

Vanguard Dividend Appreciation Index - UP 6.05%

Vanguard Dividend Growth - UP 9.43%

Vanguard High Dividend Yield Index - UP 10.35%

Precious Metals:

Vanguard Precious Metals and Mining - DOWN 21.70%

Someone earlier (not sure if it was you or not) said 13% bond wouldn't do much. A look at Fidelity's bond funds shows several that were BIG producers in 2011, including one that I own.

I also have some stinkers in there that bring me down to just the 4.8% I earned in 2011, but man for someone with my strategy and preference of NOT liking precious metals and LIKING dividends, 2011 COULD have been a HUGE year; it's acuatlly surprising I ONLY make 4.8% in 2011. I don't put all my eggs in one basket though, so I even out a little bit more. In 2011 international stocks hurt me. In 2007 they helped me. I like to be well-diversified, except for the fact that I will never include precious metals; that HELPED me in 2011, but over the last 10 years, it has hurt me as Vanguard's Precious Metals and Mining fund has returned 17.75%. I don't pretend to be a great fund picker. I stay diversified with a few bonds, more dividend funds as I'm getting closer to retirement, and I NEVER buy precious metals because I don't believe in them long term, and I still won't buy them even though they had a good 10-year run.

for pete's sake, Flagpole - buy and hold investors like yourself should be the first to understand that beating an index for 23 years straight is impossible. impossible.

and adding 1 or 2 percent for dividends isn't the point, so stop saying that.

You don't own the Dow. You own a diversified portfolio. A diversified portfolio will behave differently than the Dow. Some years better, some worse. You may beat the Dow for 23 years compounded, but no way you can do it every year.

For example:

2002: Dow -15%, SP 500 -22%

2009 Dow +22%, SP 500 +26%

that variance is because teh Dow is not a representative index. it is weird and undiversified.

oh forget it.

Flagpole wrote:

You can do it too brother. If you actually read that thread, you'd know that I include reinvested dividends in my calculations. The fact that so many of you can't fathom this makes me believe you don't invest at all.

Here's how you are GUARANTEED to beat the Dow every year using my calculations...buy the Dow...just the Dow. Reinvest the dividends from it and you win...every time.

So far I'm beating the Dow in 2012 too. I'm up 3.3% YTD. No dividends yet, so that's just flat out luck.

Not the sharpest tool in the shed are you?

Cute quote - Buy the Dow to beat the Dow.

Problem is that your "returns" have deviated wildly from the Dow and you've invested heavily in areas highly uncorrelated to the Dow. Hence, your little cute quote is irrelevant. Adding a couple of percent due to dividends will rarely make the difference in a given year between beating a particular index and not, especially when one's investments are highly uncorrelated with the index being used.

The fact is that TRULY GREAT investors beat the DOW (or the S&P 500 if you prefer) perhaps 2/3 of the time. The number of TRULY GREAT investors in this country is certainly under 500. The odds that EVEN A SINGLE ONE of these has beaten the DOW 23 years in a row is perhaps 5%. So there is a 95% chance (a pretty safe bet) that NOT ONE SINGLE PERSON IN THIS COUNTRY HAS BEATEN THE DOW 23 YEARS IN A ROW (outside of the trivial "buy the DOW" crowd).

It is a safer bet still that you are not that one person (who almost certainly does not even exist anyway). And it is a statistical certainty that you are either a liar or completely incompetent in how to properly calculate returns.

I truly love how when you were called out on the other thread you weaseled out of providing your beloved spreadsheet that doesn't lie and ultimately had the entire thread deleted. The fact that you still come back on these boards after being so thoroughly exposed is a testament to your narcissism.

Have a good day Lad.

doubter wrote:

for pete's sake, Flagpole - buy and hold investors like yourself should be the first to understand that beating an index for 23 years straight is impossible. impossible.

and adding 1 or 2 percent for dividends isn't the point, so stop saying that.

You don't own the Dow. You own a diversified portfolio. A diversified portfolio will behave differently than the Dow. Some years better, some worse. You may beat the Dow for 23 years compounded, but no way you can do it every year.

For example:

2002: Dow -15%, SP 500 -22%

2009 Dow +22%, SP 500 +26%

that variance is because teh Dow is not a representative index. it is weird and undiversified.

oh forget it.

+1

Flagpole wrote:

Steve Martin wrote:

Look, your financial advise is pretty good, but you missed it here. Trying to spin it is what you condemn Fox News for, so why are you doing the same? If it is wrong for them, it is wrong for you.

Not spinning anything. I was wrong about it getting to 13000...that's clear, and I already said so. Several others here though (in this thread) said it would go DOWN, and one even came back to crow a bit prematurely (because the Dow them went north another 700 points), so it is clear my prediction was better than theirs. I won't call them out by name though because that's not the Flagpole way.

FOX News though, by the way, doesn't SPIN...they flat out lie and misrepresent.

You know, you say that, but I have yet to see any actual evidence of it. What do you have in way of evidence that FoxNews lies?

steve:

You know, you say that, but I have yet to see any actual evidence of it. What do you have in way of evidence that FoxNews lies?[/quote]

___

What evidence is there that fox news lies? Are you kidding?

just for starters:

http://www.huffingtonpost.com/2011/06/22/jon-stewart-fox-news-politifact_n_881998.html

and this is from the Hannity show, which technically isn't the news, but still counts:

http://www.huffingtonpost.com/2009/11/11/jon-stewart-catches-sean_n_353447.html

that one is classic - they subbed out video to make it appear a tea party rally was giant.

You are incorrect in your assumption as my history displays.I agree that a diversified portfolio will behave differently than the Dow. Differently though doesn't have to mean OPPOSITE...if the Dow goes up, that doesn't mean a diversified portfolio has to go down, and sorry, but when reinvesting dividends PLUS being able to buy more when the indices are low, those things help the investor when measuring against ANY static index over a calendar year.Plus, not sure where you're getting 1-2 percent for dividends...you can manage a portfolio that easily beats that...even a diversified one (ESPECIALLY one that doesn't include precious metals as mine NEVER does).

doubter wrote:

for pete's sake, Flagpole - buy and hold investors like yourself should be the first to understand that beating an index for 23 years straight is impossible. impossible.

and adding 1 or 2 percent for dividends isn't the point, so stop saying that.

You don't own the Dow. You own a diversified portfolio. A diversified portfolio will behave differently than the Dow. Some years better, some worse. You may beat the Dow for 23 years compounded, but no way you can do it every year.

For example:

2002: Dow -15%, SP 500 -22%

2009 Dow +22%, SP 500 +26%

that variance is because teh Dow is not a representative index. it is weird and undiversified.

oh forget it.

VDAIX has been around for 5yrs

If you invested all your divs back in the fund, your annualized return for this fund would be 2.84%

the other Vanguard dividend funds are similar.

Where are you getting 10% from this? It got annihilated like the rest of the market in 2008. It was down 50%. It is only now climbing back to its nominal previous highs of $22. So your dividends, judiciously invested, result in a positive return. Nice. Good for you. But nowhere near 10%.

Did you add more to your contributions in 2008? Are you adjusting your returns on a time weighted basis? Contributions in the middle of a measurement period do not magically lower your *original* basis. In order for you to raise your time weighted dollar cost averaging returns in this fund to 10%, you would have had to quadruple planned contributions during Q4 2008/Q1 2009.

Did you put in 4x as much as normal in this specific interval?

Yeah, Steve, agip's got it right. There are TONS more things like that out there too.I'm not going to try to persuade you though because I learned a long time ago that with regard to politics and religion, people can NOT be swayed. I gave you my opinion about FOX News (which ironically is both politics AND religion, but NOT really news), and you are free to disagree.One thing I will agree with FOX News on though is when they got rid of Glenn Beck from the television...that guy is a loon, and it's too bad. When he first started his RADIO show, he wasn't so right wing and divisive and he actually made some good points that both sides of the aisle could agree with, but somewhere along the line he decided he would go down the conservative path, and with that came supporting anything conservative and ripping on all Democrats, and in addition to me no longer agreeing with just about anything he says, he's a sell out. At least Rush Limbaugh has been Rush Limbaugh the whole time he's been on the air.

agip wrote:

steve:

You know, you say that, but I have yet to see any actual evidence of it. What do you have in way of evidence that FoxNews lies?

___

What evidence is there that fox news lies? Are you kidding?

just for starters:

and this is from the Hannity show, which technically isn't the news, but still counts:

that one is classic - they subbed out video to make it appear a tea party rally was giant.[/quote]

We're talking 2011 only brother. I didn't say this was evidence of 10% over any time period. My dividend examples are all talking about 2011 (that's VERY clear in my post) and how it's VERY possible for a guy with my strategy to have gained 4.8% in 2011. In 2011 VDAIX did 6.05%. It's right there on Vanguard's site.Anyway, you appear either to not be reading my posts closely enough or are trolling (or I guess a third option is that you don't know what the hell you're talking about), so as much hilarity as your disbelief has brought me, I'm probably going to have to be done with you now...unless you somehow become more interesting immediately which I doubt.Believe what you will brother. Listen to FOX News and to the masses who tell you that investing is throwing your money away, especially in the world that Obama has created. Go buy gold if you want. Decide not to invest if you want. Decide that you know what returns look like even though you don't invest yourself. I'm sure that many here think I DO care what you do or what you believe, but I really don't. Today I'm running several long processes that I have to monitor, so I have the time to respond. Yesterday I was mostly in meetings with clients, so I didn't have the time. Rehashing the same thing too many times gets old even for me; believe what you will.

Flagpole wrote:

... and sorry, but when reinvesting dividends PLUS being able to buy more when the indices are low, those things help the investor when measuring against ANY static index over a calendar year.

Plus, not sure where you're getting 1-2 percent for dividends...you can manage a portfolio that easily beats that...even a diversified one (ESPECIALLY one that doesn't include precious metals as mine NEVER does).

Please say you are not an investment advisor.

A) Your first point above implies two things - neither of which are good for you

1) Being in a position to buy more at chosen times implies that you are not fully invested much of the time. Money out of the market will on average be a drag on overall investment performance making your 23 for 23 claim go from 0% likelihood to...well I guess there's really no place to go from there. Still 0% but with an extra drag on your performance

2) "buy more when the indices are low" implies that you know when indices are low or high. Seriously? Wow, you've been able to consistently do what even the greatest investors in the world have admitted to being unable to do!

B) Your second point about the dividends that matter shows abject ignorance. I have no idea why someone else is talking about 1 - 2 % but anyone who is not a complete neophyte would recognize that it is not the dividends in your own portfolio which determine the inherent advantage that you have over a given index but rather the dividends of the index itself.

Seriously, do you understand anything, anything at all about investing?

Flagpole wrote:

Was I WRONG? Yep. Was I SUPER wrong? Nope. ... Dude, sorry but I DO know what I'm talking about.

I like this progression of rationalizations; it's quite telling. First, give them an admission of culpability. Then, make that admission relative. Next, reaffirm yourself in the opposite direction. Voila, I really was right. Vote for me. I can see why you would be someone who "believes in change". Even if reality slaps you in the face, you can lie to yourself, convince yourself you're right, and, shake it off in the end as if it had no effect. Besides, reality's just a word, not a thing. You started well with "Was I WRONG? Yep." and went downhill from there. I really with this forum removed spam like yours from the boards. At times like this, I really wish they were true to form about this being a running forum.

Shows what you know.1) I put in 20% of my income in twice-monthly payments every month without fail. When I feel the market is low, if I have extra money at that time, then I will invest EXTRA. I ALWAYS have money in the market, more than most experts recommend as a goal too (most say 15-18%). Being in a position to put in extra at opportune moments just means I live well below my income. I can do this because I stay debt free (but for the house) and I don't waste money, NOT because I make a ton of money.2) I don't pretend to know when bottoms and tops are, and that's why I don't put in and then take out money at different times. I have REGULAR investing as mentioned in point #1 above and then I do the extra when it appears the market has dipped. Sometimes the market springs back soon after I put money in, and sometimes it takes longer. I put extra money in when the Dow dropped to 8000 and then 7000, as it continued down to 6400, but I knew it would eventually go back up, and obviously it has. I also put in extra when the Dow dropped to 12000 for the first time after being up to 14000...took longer for that to do anything, but so what. I don't plan to use that money until I retire. As 73% of years are up years, ultimately I will benefit from any amount I put in, and so far that's been the case. As long as you don't try to time the market by taking money OUT, you are only putting EXTRA money in while maintaining a regular contribution, then you're golden.3) No need to give me a lesson on dividends brother. I've been investing heavily since 1989 and know full well how dividends work.

Just curious, since you never take money out of the market what is your withdrawal strategy after retirement?

Will you withdraw a certain amount at regular intervals, regardless of what the market is doing? Will you withdraw certain funds first? Will you try and "time" the market and withdraw more when you think it is near a peak?

I'm asking because it is much more difficult to know when to sell than when to buy.