Fact

[randallg99]

$1.00 invested in the S&P 500 in 1966 would have returned $11.71 by 2001 or so, but if you avoided the 5 worst days, it would be a whopping $987.12 . . . or if you missed the 5 best days, it would only be worth 15 cents. Frequently the best days happen after the worst days.


IF THERE IS ANY ONE PIECE OF ADVICE I CAN GIVE TO THE BOARD TODAY, IT IS THIS-

we have seen a mini-correction and it may or may not continue, but if you properly alloted cash in your portfolio, the upcoming week or following week just may be the time to buy equities. It has become a traders market in the short term, but long term just may be absolutely fantastic if someone was starting a brand new portfolio this week.

However, that being said, the volatility in this market is almost unprecendented so there may be more surprises coming to the downside because what is most concerning to me is the sense of relief that the Fed is injecting into the mortgage markets. It is a false sense of relief since the Feds response has been nothing more than a band-aid on an amputation... the blood is still flowing out of the MBS and IMHO, this can continue to drag the markets into 52 wk lows.

And let it be that way... let the Fed stay at arms length. I dont want any bailouts for the wallstreeters who suck up 10k bottles of wine on my dime.

Good luck.

 

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[randallg99]

not to continue harping on the same issue, but just as I was reading articles online... here is another amazing factoid. Take it for what it is worth... it is important to stay vested (but hard during potential meltdowns like the one we are experiencing)

$10k in S&P in 1980 to early Aug '07 = $299,215 but missing five best days lowers it by $77,039 to $222,176; missing best 10 days lowers it by $124,470 to $174,745

 

[kidgas]

Yes, it is definitely important to stay in the market. It just illustrates that timing is impossible.

 

[randallg99]

bump. this is an important fact for all those who are investing in the equities markets. I believe we are at the "low points" relatively speaking.

 

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[G_Alexander]

So should I just throw together a diversified $5,000 portfolio this summer and let it sit for 25 years without looking at it?

What results would this yield? Same as the general S&P's posted above?

-Alex

 

[arfa]

I'm not an expert, however according to Kondratiev cycles we finished around 60 years of the up trend and now we are going to have donwtrend of about 30 years. If this is true the statistics which was used before (and most of the statistics exist from after 1945) before is not relevant for the next 30 years...

 

[MJ DeMarco]

FACT: All these statistical data points all have one thing in common. DECADES. 30 years, 40 years, sorry ... but I just don't have 30 or 40 years to risk. Kinda would suck to find out you put faith in this data to only find out that after 40 years, the data didn't pan out like it was suppose too .... millions of people now wake to this reality. They bought into "facts" like these and now see themselves with obliterated net worth's and a return to work.

The tried-and-true formula isn't tried-and-true at all. Buy and hold is dead. I'm still waiting to find that 22 year old guy who got rich investing in mutual funds ... waiting .... waiting .... ..... I hear crickets chirping. Fact is, mutual funds don't make you rich, they can keep you rich and can grow your net worth slowly if vested at the right times -- the 22 year old didn't get rich investing in mutual funds, but by selling them, offering them, and then taking his management fee.

In the Fastlane, the markets are used to create income. In the Slowlane, the markets are used to create wealth. Unfortunately, the latter (according to the data) always circles back to elderly time horizons (30,40,50 years). Sorry, but this road to wealth isn't getting 40 years of my life put on the pass line.

As for the current state of the markets, is this market an opportunity? Hell yes!! A traders dream. Just look at the Misery Portfolio ... 160% return in just a few months. I don't invest in the markets to create wealth, I invest/trade in the markets to create income. The wealth? I leave the heavy lifting to my business, something that is capable of going faster than 10 mph.

 

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[MrPink]

I have yet to see a study that shows that any other method is better than buy and hold for a long period of time without cherry picking start and end dates.

Mutual funds are usually a rip off due to the expense ratios.

I would say the reason most people are disappointed in their returns is due to not having a clue about their risk tolerance.

 

[G_Alexander]

Thing is, I would never put $5,000 into a fund that I have to wait on, when I could be leveraging that $5,000 into a SFH property first. (My last post was not only skeptical with the whole "25" years things, but a little sarcastic.

Fix up the property, sell.

Leverage the next property (first multi-unit) with $20,000 down. Repeat process.

People have had major success with this and it takes way less time. Lets say it would take me 8-9 years to acquire 5 major apartment complexes which cashflow heavily.

You sit there saying, "I only have 16 more years till my $5,000 becomes $150,000! Yay!." I would probably be sitting in one of my Lambos shaking my head and havin' myself a good ol' chuckle. I get to spend the next 16 years of my life (time is the most valuable asset) doing what I WANT to do.

MJ, you hit the nail on the head in your post. Also, I plan on living by the "if I can't see it, feel it, touch it, smell it; then I won't invest in it", at least until I am retired young.

-Alex