Thursday, 11 March, 2010

1. By Chuck B.. Comment posted 11-Mar-2010 @08:19am:

   It's absurd to say "the odds of making a significant profit over time in the market are just about nil." Over the past 80 years, the stock market has generated an average return of something like 12% per year. (Sorry, I don't have the exact number at hand at the moment.) Yes, there have been bad periods and good periods, but the returns have been much better than interest on cash or "secure" bonds, whatever those are.
   
   If you have a short investment horizon, avoid stocks. But if you have an investment horizon of 5 years or more, you should have at least some of your money in the stock market. How much depends on your personal tolerance for risk. [CAVEAT: I am not a professional investment advisor. Please talk to one rather than take anonymous advice on the internet.)
2. By Shel-tone. Comment posted 11-Mar-2010 @08:22am:

   Mr. McGuire: I just want to say one word to you - just one word.
   Ben: Yes sir.
   Mr. McGuire: Are you listening?
   Ben: Yes I am.
   Mr. McGuire: 'Plastics.'
   Ben: Exactly how do you mean?
   Mr. McGuire: There's a great future in plastics. Think about it. Will you think about it?
   Ben: Yes I will.
   Mr. McGuire: Shh! Enough said. That's a deal.
   
   -The Graduate
3. By Klaus. Comment posted 11-Mar-2010 @08:36am:

   That was the best advice for investments I ever received.
   Thank you, wise John. Now I invest all my money in stocks. Or not. Well, maybe.
4. By Candidus. Comment posted 11-Mar-2010 @08:38am:

   Doesn't it make more sense to just save money or buy secure bonds with a low rate of return since the odds of making a significant profit over time in the market are just about nil and why unleash your greedy urges, life's too short?

   
   Someone's gotta prepare the rubes to accept what's in their own best interest, I suppose.
5. By Lairbo. Comment posted 11-Mar-2010 @08:49am:

   It isn't idiocy in and of itself, but it can be (and often is) done idiotically. The same guidelines for a weekend of gambling in Las Vegas apply also to investing (I think): Don't bet everything, only play the games where you've got some small measure of control (cards, say; poker, especially), and don't stay too long.
6. By Bob Newsgoat. Comment posted 11-Mar-2010 @09:12am:

   I think the important thing is not to have all your eggs in one basket. Whenever you make a risky (like stock market) investment you should ask yourself "can I afford to lose it all" if the answer is "no" then either make a smaller investment or invest in something safer and more low yeild.
   
   Also in many ways the stock market is like gambling. It is foolish to bet on roulette, but wise to bet on a horse race where you have some clue as to the likely outcome. If you have good information as to how a stock will perform - get in there!
7. By Bisbonian. Comment posted 11-Mar-2010 @10:14am:

   It's absurd to say "the odds of making a significant profit over time in the market are just about nil." Over the past 80 years, the stock market has generated an average return of something like 12% per year.

   
   
   Except:
   
   Wall Street Journal, December 20, 2009
   by Tom Lauricella
   
   "The U.S. stock market is wrapping up what is likely to be its worst decade ever.
   
   In nearly 200 years of recorded stock-market history, no calendar decade has seen such a dismal performance as the 2000s.
   
   Investors would have been better off investing in pretty much anything else, from bonds to gold or even just stuffing money under a mattress. Since the end of 1999, stocks traded on the New York Stock Exchange have lost an average of 0.5% a year thanks to the twin bear markets this decade."
8. By Bisbonian. Comment posted 11-Mar-2010 @10:26am:

   The same guidelines for a weekend of gambling in Las Vegas apply also to investing

   
   There might be a reason for that.
9. By One IOTA short. Comment posted 11-Mar-2010 @11:01am:

   Research the “Rule of 72” interest-earning formula. The following is only a rough calculation, but close enough to show the number of years needed to double your money using common investments and the interest rate paid:
   
   Savings Account: 0.25%, 288 years to double
   Money Market Account: 0.50%, 144 years
   US Treasury Bond: 1.00%, 72 years.
   Certificate of Deposit 5-year: 3.00%, 24 years
   Corporate Bond A+ rating: 5.00%, 14 years
   Corporate Bond BBB rating: 7.00%, 10 years
   Generic Stock, appreciation + dividends: 7%, 10 years
   High Flyer Stock high risk: 15%, 5 years
   
   The key to sleeping well and not constantly worrying about your investments is to build up a savings base of ‘safe money’ first. You determine the amount. Then over time, invest small amounts of your additional savings in the other higher return items, as you can afford it or see opportunities, working up the ladder of risk.
10. By Candidus. Comment posted 11-Mar-2010 @11:15am:

    Since the end of 1999, stocks traded on the New York Stock Exchange have lost an average of 0.5% a year thanks to the twin bear markets this decade.

    
    It's all in where you delimit the timeframe.
11. By Bisbonian. Comment posted 11-Mar-2010 @11:49am:

    Generic Stock, appreciation + dividends: 7%, 10 years

    
    

    
    It's all in where you delimit the timeframe.

    
    Yeah.
12. By One IOTA Short. Comment posted 11-Mar-2010 @12:28pm:

    Agree...you are right about the timeframe.
    
    How do end up with one million dollars invested in the stock market?
    
    Start with two million.
13. By Crispy Critter. Comment posted 11-Mar-2010 @12:58pm:

    I like how guys get all macho and sure of themselves when they talk about how to invest in the market. It's only fools who talk this way.
    
    Remember, it's not cheap to invest in the Market.
14. By chazunga. Comment posted 11-Mar-2010 @03:36pm:

    I heard Al Gore's done alright...
15. By wally the duck. Comment posted 11-Mar-2010 @04:40pm:

    The notion that the stock market provides good returns over a long time period is only true for selected time periods; you can as easily show the opposite. Bonds are not always a 'secure' haven, as recent events have proven. Even the value of cash is eroded by inflation.
    There is no safe haven; you must pay attention to events.
16. By Snag. Comment posted 12-Mar-2010 @06:41am:

    Wally the wise, as always ! There is no safe-haven, so don't even waste time looking.
    
    One thing you should consider, though, is to invest something in "yourself". That great American dream (which isn't restricted to Americans) of running your own business can generate returns well in excess of the stock market. On its most basic level you can simply buy and sell things (remembering that you make your margin when you buy). On a higher level you can add-value before resale, sell your own skills and creativity or employ or franchise people and sell their skills.
    
    Of course you will need to run the twin gauntlets of taxation and regulation, but you can learn to manage these artefacts of doing business on the government's turf.
    
    Whatever you do ... know why you are doing that (as opposed to other options), diversify into at least one relatively unrelated area and work towards the business running without your presence.
17. By Chris Benson. Comment posted 12-Mar-2010 @04:09pm:

    With regard to the comments above concerning timeframes, if you had money to invest in March of 2009 and didn't buy any stocks, you missed the opportunity of a lifetime. Even GE is up about 140% over the last 12 months.
    
    I had a lot of my 401(k) in stupid managed mutual funds - Fidelity Fifty lost about 45% of its value. So I bit the bullet, cashed those funds out and went contrarian, snatching up the big losers at bargain basement prices.
    
    Another I bought about a year ago, Textron (makes Bell helicopters and Cessnas) is up 322%. Do the rule of 72 on that!
18. By drman321. Comment posted 13-Mar-2010 @08:36am:

    The broad market may have stunk over the last decade, but a good truly diversified portfolio of mutual funds still likely faired well, 6-10% average annualized return. The problem is that most people do not have a truly diversified portfolio. Their advisors are operating off of "sample portfolios" the fund companies recommend. To truly know how diversified you are you need a means to measure correlation across your portfolio, and need to strive to keep said corrrelation as low as possible. Sadly many investors and investment advisors either do not have the expertise to do this, or do not care enough to look beyond which company has the best marketing.

Original content © 2011, John Walkenbach