Flagpole wrote:
...Mutual funds have gained on average about 11% since inception which is right on what I have averaged yearly since 1989 when I started investing...
That seems odd.
It is an established fact that the Dow has beaten the majority of mutual funds over time. And yet someone who has beaten the Dow, not just on average but EVERY SINGLE YEAR FOR 25 YEARS IN A ROW, has somehow managed to make the same as the mutual fund average (which is below the Dow).
Extraordinary!
flagpole,
I reallly have no argument on much of what you have said, except an academic one. Which is, at any point in time one's ten year expected return must match one's expected cash flow. If my distribution rate is 4%, and my return is 3%, I have a distribution mismatch.
Corporations do drive value thru profits, however much of the growth in earnings of late is manufactured, and not in the way of products. I do believe businesses are cyclical. In the 2000-2003, and 2008-2010 government regulation and the spirit of the times led to periods of more conservative business management practices. in the build-up to the tech and housing bubbles an "anything goes" attitude prevailed. I see many of the same practices today in creative accounting, stock buybacks, mergers, acquisitions, really almost anything to extract value from companies.
Most posters here assume the next five years will be like the last five years. I disagree, I think the next ten years will be more like the last fifteen years.
Igy
Funny Math wrote:
Flagpole wrote:...Mutual funds have gained on average about 11% since inception which is right on what I have averaged yearly since 1989 when I started investing...
That seems odd.
It is an established fact that the Dow has beaten the majority of mutual funds over time. And yet someone who has beaten the Dow, not just on average but EVERY SINGLE YEAR FOR 25 YEARS IN A ROW, has somehow managed to make the same as the mutual fund average (which is below the Dow).
Extraordinary!
Well, I actually did NOT beat the Dow last year. And hey, I can do the math any way I want!
"There is no reason for me to believe that that trend will change in the future that I can foresee with my limited abilities."
Fixed.
I was with you up until your original last statement. What a steaming load of stupid shxt you write.
Ghost of Igloi wrote:
...
Most posters here assume the next five years will be like the last five years...
Igy
Try speaking for yourself. It works so much better that way.
Flagpole wrote:
Funny Math wrote:That seems odd.
It is an established fact that the Dow has beaten the majority of mutual funds over time. And yet someone who has beaten the Dow, not just on average but EVERY SINGLE YEAR FOR 25 YEARS IN A ROW, has somehow managed to make the same as the mutual fund average (which is below the Dow).
Extraordinary!
Well, I actually did NOT beat the Dow last year. And hey, I can do the math any way I want!
Fair enough
Ghost of Igloi wrote:
The syllogism to that statement is:
None of that means you can't lose money with Amazon. Many will do so at a large loss.
Our two statements essentially summarize the market: buy stock XXX and sell it later for a profit or loss.
I would add, don't let anyone tell you they know when it is best to buy or sell, unless in hindsight.
Flagpole wrote:
Ghost of Igloi wrote:flagpole,
Your assumptions are based on the belief that the future will perform like the past. Isn't that the opposite of what most investment disclaimers carry? Also, the 1970s, the era prior to Greenspan as Fed Chair, is totally different in so many ways and not for the better. I think it is incredibly naive for one to beliieve that debt can be multiplied into the future without a bad ending. One can choose to ignore Detroit, Illinois, Puerto Rico, Greece or China. Or one perceives an environment that is changing right before our eyes. Add to that list non-GAAP accounting, record stock buy backs and record stock/bond valuations. Commodities and emerging markets are collapsing as the policies of central banks reach the end game. If you think the last 15 years of 4% equity gains will suddenly return to the double digits gains of the 1990s, well think again.
Igy
Again, what you wrote there could have been written by anyone on any day from the 1970s on, substituting some names of people and places and dates. In 1979 Businessweek had the article "The Death of Equities", and we have been told time and time again that stocks are not going to perform as they have (and I don't PLAN that they will), but then they find a way to do so. 1987, 1991, DOT COM bust, 2007-2009 crash, and since and before and in between.
Mutual funds have gained on average about 11% since inception which is right on what I have averaged yearly since 1989 when I started investing. I have a spreadsheet that projects earnings, and I have columns from 0% to 9%, so I don't even entertain 10% or 11% or more (even though history tells me I definitely could). So, I'm not PLANNING to get what I have gotten. The thing is though, so far I always expect a conservative return and over time I have always done better than I conservatively planned. Until there is a HUGE change in the way the US does business, there is no reason to expect a big change from what has happened. Companies still drive profits and value, and that is not likely to stop.
You're regurgitating exactly what the mutual fund industry wants you to think, and this is the major reason why my whole generation, except for people like me owning stocks, can't afford to retire. Many of the performance claims are so far off that you could be sued for malpractice if you were in business and claimed this.
The facts:
By Morningstar data, for the last 10 years, the average mutual fund return is 6%.
This site calculates the Compound Aggregate Return for the SP500:
http://www.moneychimp.com/features/market_cagr.htmIn constant dollars and with dividends reinvested, and return since 1871 is 7%. Seven percent. Not 10 percent or 11 percent or what charlatans like Dave Ramsey want you to think. But SEVEN percent.
And it can be worse than that. For the people I worked with before I retired in 2000, the return in constant dollars has been 1.91%.
Between 1969 and 1984, the return in constant dollars was 0.36%.
Because of this, the average return since 1970 is not even 7 percent. It is less than 6 percent.
The difference between the real 6 percent return since 1970 and the claimed 11 percent is SIX TIMES THE MONEY. Over 20 years, the difference is over TWO TIMES the money. And that's why most of my generation can't afford to retire.
Snake Oil.
coach d wrote:
The difference between the real 6 percent return since 1970 and the claimed 11 percent is SIX TIMES THE MONEY. Over 20 years, the difference is over TWO TIMES the money. And that's why most of my generation can't afford to retire.
Snake Oil.
"Most" (over 50%) of your generation can't retire b/c they haven't saved jack. 11% vs 6% returns over the last 45 years won't turn a paltry amount into enough to retire on.
LeT,
You sound grumpy. Did you have a bad day today?
Igy
BDI,
My point is there are valuation models that are highly reliable. Those measures show the market extremely overvalued. If one decides to ignore those indicators, it is no different than one who decides not to invest when the market is clearly undervalued. The same valuations can be applied to individual stock valuations. These tools should be used to evaluate market risk and individual securities risk.
Igy
I have no problem with using various measures to evaluate investments, but they don't guarantee anything. When I bought Amazon, it was overvalued. When I sold it, it was overvalued. Meanwhile I pocketed a nice profit.
BDI,
The strength of confidence in the skill of the trader is also the greatest weakness of the trader. The confidence and skill of many traders wil be tested in the coming year.
Have a good weekend.
Igy
Good Evening,
Here is a link to an article that should be of interest to most investors:
http://www.businessinsider.com/stock-market-crash-2015-7
Igy
For many traders, it's a crap shoot. Hopefully you're better than average.
A good weekend to you too.
Ghost of Igloi wrote:
Good Evening,
Here is a link to an article that should be of interest to most investors:
http://www.businessinsider.com/stock-market-crash-2015-7Igy
Excellent, and very reasonable article.
Thank you for sharing it.
Plus Won,
Glad you enjoyed it. You may want to look into John Hussman's work on market valuation. Also, I am sure to come under criticism for posting this link, but here is a good piece by David Stockman on Amazon's recent earnings and subsequent rise in market cap.
Well I'm off to a Saturday morning run.
Igy
Still pushing Stockman's shit? What, no Goldman Sachs? Some people never learn.
Ghost of Igloi wrote:
Good Evening,
Here is a link to an article that should be of interest to most investors:
http://www.businessinsider.com/stock-market-crash-2015-7Igy
"So far, these concerns have just made me sound like Chicken Little. The S&P 500 is up strongly from where I first sounded the alarm."
Ghost of Igloi wrote:
LeT,
You sound grumpy. Did you have a bad day today?
Igy
Nope. Great day.
I do note that you sound like a moron. Did you have a stupid day today?