Down goes the Dow

Pretty Sure Man wrote:

Ummm....pretty sure that Flagpole advocates investing in low cost index funds through Vanguard or Fidelity. No brokers fees involved.

But thank you for playing.

You really think there are no broker fees on index funds?

Hell, you see them charge 40 to 50 basis points -- and God knows what other hidden fees they have.

Hence, if you have $2 million in lifetime savings in your retirement account, you are paying $10k per year in fees , or over $800 per month. You could buy a very expensive car with that kind of monthly payment.

Re: "take a straight edge line it up on the slope of the line from 1980 to 1995. It hits that 2008/9 low and settles at about 10,000." That's funny, my graph settles at 40,000. http://www.barchart.com/chart.php?sym=%24DOWI&style=technical&template=&p=MO&d=X&sd=07%2F31%2F1980&ed=07%2F31%2F2014&size=L&log=1&t=BAR&v=0&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=07%2F31%2F2014#jump

Terror tunnels wrote:

Pretty Sure Man wrote:

Ummm....pretty sure that Flagpole advocates investing in low cost index funds through Vanguard or Fidelity. No brokers fees involved.

But thank you for playing.

You really think there are no broker fees on index funds?

Hell, you see them charge 40 to 50 basis points -- and God knows what other hidden fees they have.

Hence, if you have $2 million in lifetime savings in your retirement account, you are paying $10k per year in fees , or over $800 per month. You could buy a very expensive car with that kind of monthly payment.

anyone who wants can by index funds at the fund company and pay almost nothing. The Vanguard SP 500 fund costs .04%, which would be just $800 for a $2 million investment.

but sure, if you want to hire a middleman then the cost goes up. And hiring a broker is not crazy if you don't want to do the work yourself.

Flagpole wrote:

Just YESTERDAY the second quarter 2014 results came out showing a 4% gain. Investors spooked by Argentina. Really, a non-issue.

Flagpole, my ashonishment is getting the better of me, so I have to ask - Do you honestly believe that 4% gain number? After future revisions, do expect it to still be +4%?

Flagpole wrote:

have to ask wrote:

I can't even fathom the arrogance needed to make a statement like this. To think you know enough about what is "warranted" or not in a relatively small daily movement of the stock market is ludicrous.

(I'm not usually very good at finding the right word, but ludicrous was perfect here: -so foolish, unreasonable, or out of place as to be amusing; ridiculous).

Also, two important manufacturing indices predict expansion, consumer confidence is predicted to get better, and several other things that point to not only a continuing improvement of the economy but a ramp up in speed of that improvement.

Do you follow global economic conditions as part of your job? I do. Just because someone has knowledge or insight in an area that you don't doesn't mean that they are arrogant.

Yes, I now am more confident that arrogance was a decently-chosen word.

Tell me, how well did those predictors you hold in such high esteem forecast the previous major global economic downturns?

It is crazy if you realize it will cost you tens of thousands of dollars to pay for non-existent "expertise".

Simple Match wrote:

agip wrote:

anyone who wants can by index funds at the fund company and pay almost nothing. The Vanguard SP 500 fund costs .04%, which would be just $800 for a $2 million investment.

Very few funds have such low fees but yes, some do. No reason at all to use any other types of funds. But I suspect even these funds have secret ways of getting into your pocket

but sure, if you want to hire a middleman then the cost goes up. And hiring a broker is not crazy if you don't want to do the work yourself.

It is crazy if you realize it will cost you tens of thousands of dollars to pay for non-existent "expertise".

many studies have found that the average individual investor, left to his own machinations, will achieve terrible returns. he will buy high and sell low and not be diversified.

but of course that is just averages. If you actually do your homework, an individual investor can do fine on his own.

it's like changing oil - yes, you CAN do it on your own, but most people will put it off and do it wrong if left to themselves. most pay the $2 and get it done right.

for example, I've been in a running skirmish with Maserati on how to measure the stock market's performance. He is a fine fellow and knows quite a bit about investing, but even he doesn't seem to understand the value of dividends, and, less importantly, seems to look just at the Dow to gauge stock market returns. He should include dividends and he should look at global stock market measures, but what can I tell you.

And he is an educated guy with much investing experience. Imagine how the average joe is going to misunderstand the market - in far, far more profound ways.

For the record, right now world stocks are 3.7% off their all time highs. Which is not very much.

Maserati wrote:

Keep beating that drum, Flagpole.

I do agree, however, that this downturn is unlikely to be sustained.

DJIA up 0.42% YTD at today's close of 16,563

This is not, I repeat this is NOT, 2013, which was by all measures an absurd year.

This is not yet a decent buying opportunity IMO.

I am up just over 2% on the year so far, so certainly not a superb year to this point. Makes no different to me though as I am still 12 years away from retirement.

Whether to buy or not only depends on your closeness to retirement (or if you are already independently wealthy) and your level of debt.

agip is a good guy.

I do, however, understand the value of dividends--I also understand what is and is not a qualified dividend, and the tax rates that apply on those "world stock" dividends. I am doing much, much better this year out of the market, than any of the indexes, including dividends, on an after-tax basis.

Again, I have no qualms about getting back in at some point.

Also, when you talk about fees, you should differentiate between brokers and fund managers. It has reliably been shown that fund managers add no value versus index funds, except in a few very rare instances. Brokers, however, can be useful in buying and selling better than could the individual, in certain situations.

Minor waffling in the DJIA this morning, down around 27 so far. Trivial.

BTW I saw some TV last night (boy does TV suck), and I saw Cramer, who agreed with my assessment that it is not yet a good broadly-based buying opportunity, but that there may be specific stocks worth looking at. Anybody listen to that guy?

agip wrote:

but sure, if you want to hire a middleman then the cost goes up. And hiring a broker is not crazy if you don't want to do the work yourself.

It is crazy if you realize it will cost you tens of thousands of dollars to pay for non-existent "expertise".[/quote]

many studies have found that the average individual investor, left to his own machinations, will achieve terrible returns. he will buy high and sell low and not be diversified.

Name one such study.

From what I understand, and this is completely logical, managed funds ALWAYS underperform the indices in the long run.

Why is this logical? Because of the fees of course. If your long run net annual return is 7% but you are paying 1.5% to 2% to a broker, with compounding over a 30 year period, you lose @ 50% or your gains to the broker. A 7% annual return over 30 years gives you a gross return of 661% while a (7% - 2%) 5% annual return yields a full return of 332%. Just about 1/2.

it's like changing oil - yes, you CAN do it on your own, but most people will put it off and do it wrong if left to themselves. most pay the $2 and get it done right.

Actually changing oil requires expertise. And costs more like $25 not $2.

Investment advice, for the most part, ain't worth a dime.

Fidelity made the Johnson's billionaires because of the fees, not because they invested well.

And the Wall Street Hedge Fund billionaires made their money ripping off investors via high frequency trading.

Simple Match wrote:

agip wrote:

but sure, if you want to hire a middleman then the cost goes up. And hiring a broker is not crazy if you don't want to do the work yourself.

It is crazy if you realize it will cost you tens of thousands of dollars to pay for non-existent "expertise".

many studies have found that the average individual investor, left to his own machinations, will achieve terrible returns. he will buy high and sell low and not be diversified.

Name one such study.

[/quote]

even bears need a bullish side wrote:

childish stock analysis

https://www.google.com/?gws_rd=ssl#q=dow+jones

take a straight edge line it up on the slope of the line from 1980 to 1995. It hits that 2008/9 low and settles at about 10,000.

Klondike was 3000 point too generous.

The stack market like all Ponzi games requires the faithful to do as they are told. flagpole is one of the preachers spreading the word of the wall street gods. Invest when things are good invest when things are bad and don't forget to pay your brokers fees.

Dude, you have no idea what you're talking about. Don't try to justify your own lack of investing. I've been investing since 1989 when the Dow was at 2,700. I've averaged more than 10% gain annually since then. As was previously told to you by agip, you can pay next to nothing to Vanguard and Fidelity. What they get from me is peanuts compared to the total pile. Anyone worried about brokerage fees either has no idea about such things or is investing with the wrong firms.

You will have to get more interesting or more knowledgeable for me to continue to converse with you on this topic. Right now you are boring and ignorant on the topic.

Oh look, another market efficiency debate. How cute.

There's three options:

a) Pick equities yourself

b) Pay someone else to pick equities for you

c) Pay Vanguard a (very small) amount to pick an index for you

If you're smart (read: smarter than people doing this 80hours/week for 30 years), pick 'a'. If you're rich (read: rich enough that you don't talk to strangers on the internet about stocks) pick 'b'. For the other 99.99%of us, 'c' is the best option.

There's nothing more to debate. That's it.

Simple Match wrote:

it's like changing oil - yes, you CAN do it on your own, but most people will put it off and do it wrong if left to themselves. most pay the $2 and get it done right.

Actually changing oil requires expertise. And costs more like $25 not $2.

Investment advice, for the most part, ain't worth a dime.

Fidelity made the Johnson's billionaires because of the fees, not because they invested well.

And the Wall Street Hedge Fund billionaires made their money ripping off investors via high frequency trading.

alls I can tell you is that most people don't want to make the effort to learn how to be good investors. You can shout all you want until you are hoarse, but most people will do a terrible job when left to themselves.

I have to pick up the pieces afterwards, so I know this intimately.

Simple Match wrote:

Fidelity made the Johnson's billionaires because of the fees, not because they invested well.

I don't 100% disagree with what you're saying, but some more info needs to be provided to clarity.

1) Fidelity makes money on fees yes, but they get a LOT of fees because they have a LOT of clients because the fees are LOW. Fidelity is a VERY CLOSE second to Vanguard when it comes to investment companies. Fidelity has a great model and product, and it is entitled to the riches it has earned.

2) In an earlier post you mentioned paying 1-2% to a broker. Again, if you know about Vanguard and Fidelity, you don't pay that.

People (non investors) get all worked up about broker's fees and inflation and calling the stock market a Ponzi scheme (which it is not). If we go back to 1989, anyone who told me those things, I have beaten more than ten fold (easily) with investing in the stock market. Anyone who is afraid of inflation taking away investment money should invest MORE, not NOTHING! People who rip on the stock market because they say it won't provide for a good retirement for them still carry huge amounts of debt on things...credit cards, student loans, car loans, etc. Get rid of that debt so that you don't need much in retirement to live well. Statistically Americans are horrible with their money.

Inefficient Thread wrote:

Oh look, another market efficiency debate. How cute.

There's three options:

a) Pick equities yourself

b) Pay someone else to pick equities for you

c) Pay Vanguard a (very small) amount to pick an index for you

If you're smart (read: smarter than people doing this 80hours/week for 30 years), pick 'a'. If you're rich (read: rich enough that you don't talk to strangers on the internet about stocks) pick 'b'. For the other 99.99%of us, 'c' is the best option.

There's nothing more to debate. That's it.

Yes, if you want to be in the equities market--except note that (a) doesn't require smarts so much as it requires work, and lots of it. Also, (b) should include if you are experienced enough in particular businesses or particular sectors.

But overall, yes.

Down 69 today to 16,494

On August 1, down 0.5% YTD

SP500 down 5.5 to 1,925

On August 1, up 4% YTD

We all know how these indexes are calculated, you be the judge.