DOW drops 1000 points

[30ashopper]

Dow Jones Industrial Average, DJIA Index Quote - (NASDAQ) DJIA, Dow Jones Industrial Average Index Price

750 points in five days. Quite the down turn.

 

[scooterbug44]

Yep, that's why you invest LONG-term!

And BP is apparently still a good stock.

 

[30ashopper]

Yep, that's why you invest LONG-term!

And BP is apparently still a good stock.

I don't know, I keep hearing that "buy-and-hold" is dead. It worries me a bit as I like "buy-and-hold" myself because it is so simple. If you look at the last decade, "buy-and-hold" has a very dismal record of very little return.. and now they are talking about the potential for two lost decades in the U.S. markets.

 

[scooterbug44]

Would these be the same people who recommend all of the risky and unbacked financial concepts and massive borrowing that are causing the current global debt clusterpuck?

"Buy and hold" is dead like not being in debt and living up to your financial obligations is dead. :roll:

Though IMO most of that advice is based on the fact that they don't make any money when you buy and hold long term. They want you making lots of trades so they get commissions.

They can keep giving advice, but I will stick to those tired old fashioned financial ideas - the ones that they have been scoffing at for years, and that we are all realizing weren't quite so stupid and old-fashioned after all - just good common sense.

What are they using to quantify the rate of return? My guess is that if you extend the time period of what they are comparing it to include when the bottom falls out and the bubble pops, not just the "ups" buy and hold looks better. Interest rates aren't great, stocks continue to increase in value and pay dividends, and the fact that "financial pundits" are advocating against it just convinces me it's a good idea.

 

[Lynnie]

Was in a meeting yesterday with a wholesaler who doesn't believe the last ten years have been a lost decade, but rather proven opportunities to invest on lonely vs. popular theories.

Historical data proves the lonely side to the theory will bring much greater returns overall. So, coming out of the lost decade places us in a lonely spot. I am seeing opportunities, but not necessarily buy and hold either. I think you have to use a little more sophisticated strategy today.

 

[Andy A]

Was in a meeting yesterday with a wholesaler who doesn't believe the last ten years have been a lost decade, but rather proven opportunities to invest on lonely vs. popular theories.

Historical data proves the lonely side to the theory will bring much greater returns overall. So, coming out of the lost decade places us in a lonely spot. I am seeing opportunities, but not necessarily buy and hold either. I think you have to use a little more sophisticated strategy today.

I used a great strategy, Lynnie. I got out and I'm staying out. I must say, though, if I were your age that likely would not be the case.

 

[beachFool]

Was in a meeting yesterday with a wholesaler who doesn't believe the last ten years have been a lost decade, but rather proven opportunities to invest on lonely vs. popular theories.

Historical data proves the lonely side to the theory will bring much greater returns overall. So, coming out of the lost decade places us in a lonely spot. I am seeing opportunities, but not necessarily buy and hold either. I think you have to use a little more sophisticated strategy today.

Diversification and having plan (and sticking to the plan) is a little more sophisticated.

Yes, the S&P 500 is down for the decade.

But it would be very foolish/risky to own 100% large US corporations.

OTOH, a 60/40 portfolio of US companies large & small combined with Barclays Aggregate Index had a Jan 2000 - Dec 2009 return of 6% annualized (assuming annual rebalancing which is not buy and hold).

We used DFA Large Cap Value, R 2000 Value index & the Barclays index.

There would be the tax drag of mutual funds also but that ain't always bad.

Is the Barclays index appropriate? The dramatic decline in interest rates could have skewed things.

OK, maybe sometime I'll run it with 1 mo T-bills. I don't feel like fooling with it now...long day.

 

[Lynnie]

Buz, I spoke with someone last week who follows another lonely theory......Chinese Gov't Bonds......emphasis is only their gov't bonds. Do this for a defensive measure?

 

[scooterbug44]

That seems to be counter to the advice I have always been given to diversify, diversify, diversify.

 

[Lynnie]

Defensive is diversifying. I placed 'only their gov't bonds' so people wouldn't be confused thinking there was an advocacy of buying their equities, etc. It is a country taking off industrially and their bonds should be very safe......think USA in the 40's.