Interesting Fact

[Rod]

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We were discussing this fact in my investments class:

Over the last 30 years, the market has spiked 90 days.

It sure would be nice to know which 3 days out of the average year this occurs!

This is why it is not a good idea to be in the market for the short-term, because you don't really know when those spikes are going to occur. If you are in for the long-term, you will hit those spikes each and every time!

Since the stock market beats inflation by

2 1/2% annually, you can't go wrong in the long-term.

God Bless

 

[Guest]

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Huh? You only need 4-5 transactions a year to kill that kind of return.

 

[Frizz B.]

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I agree MLK, I have been tracking the funds since June, and the market has it ups and downs for a good period. But like in June of last year the market just kept on rising until January and now it is in a pattern. If you can play the patterns, you can do really well, and hopefully you will be in the right spot when the market leaves that pattern to create a new pattern.

 

[Rod]

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mlk_man wrote:

Huh? You only need 4-5 transactions a year to kill that kind of return.

As we know, the stock market (SM) and the housing market are the best protection against inflation in the long term. The SM will average a 11% return annually. The 2 1/2% above inflationaverage is after taxes/fees. I'm not talking about a flat return annuallyof 2 1/2%, but rather 2 1/2% above inflation. I'm sorry if I sound confusing. I'm just trying to convey some exciting facts as I learn them myself.

The point is this- none of us really know when the 3 highest tradingdays of the year are. So, if you are in the market for the long term, you are guarantee to land those days year in and year out. I hope I make more sense now.

God Bless:^

 

[Rolo]

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Rod wrote:

The point is this- none of us really know when the 3 highest tradingdays of the year are. So, if you are in the market for the long term, you are guarantee to land those days year in and year out. I hope I make more sense now.

Yes, but you are also guaranteed to be in during the dips and falls.

That is what I call "Serpent Analysis", only looking at part of the picture, stating a half-truth, and put a biased spin on it.It is true thatAdam and Evebecame like G-d, but only in that one aspect in that theyhad knowledge of good and evil. (Genesis 3:5)

Now for what I call "Fun With The Teacher", or, "Are You Just Reading From A Book, Or Do You Really Know What You Are Talking About?": Ask him how many times, on average over the same time period, the market dropped and how many low trading days there are per year.

The reason that stocks are better overall is that it is one giant uptrend.



[align=right](1 Thessalonians 5:21)[/align]

 

[Rod]

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I realize that if you are in for the ups in thelong term, you are also in for the downs. That's what investing is all about, isn't it? Being willing to take those risks, but hoping for time itselfto be on your side in the end.

But, thanx Rolo. I'll run that by him FYI.

 

[Pete1]

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It's fairly simple really, the longer you hold a portfolio of stocks, the better the chance of achieving the historical equity premium. There has never been a 20 year rolling periodin whichstocks turned in a loss and also, over roughly 94% of the 20 year rolling periods, the worst case for stocks beats bonds and treasuries. Most of this is very well covered in Jeremy Siegals "Stocks for the Long Run." The problem for most is the daily volatility of a 100% stock portfolio. Few can stomach the day to day volatility for 20 years. A diversified portfolio of our 3 stock funds held in equal proportions since the beginningof this year would have returnedbetween 3-4% butwe have seen many swings of 2 or 3% in a single day inall of the stockfunds.The point is if you are buying and holding, don't watch the day to dayswings andif you are timing, it is very tough to beat the stock averages. Even Tom has admitted as such and has chosen to compare his return to the diversified portfolio.

 

[Rod]

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Thanx Pete. I believe you summed it up even better than I could have.

 

[tsptalk]

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Even Tom has admitted as such and has chosen to compare his return to the diversified portfolio.

True. If the C fund (S&P) is up 20% for the year, and the S fund (Wilshire 4500) is up 35%, it is real tough to make 36% yourself. Here are my past returns. I think 2000 was the yearthat had the most impact on my return and I only made 4.5%. http://www.tsptalk.com/returns/returns2.html.

One note; Although I didn't post it because I didn't track my returns that closely before 2000, in 1999 I started to get bearish (which is why I did well in 2000) but I remember I missed a lot of gains in the 2nd half of 1999. I'm always early :?.

 

[Rolo]

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tsptalk wrote:

I'm always early :?.

heh...hope that's not what she said! (couldn't resist)


[line]


My point is that the teacher used "spikes", a short-term look, to quantify long-term investing. If you think long-term, then think long-term only and, yes, the longer you stay invested, the more likely you will attain the historical average.

"Long term" = 20 or 30 years. Pick any 20- or 30-year period and see what you get, then average it out for all of them.

Pick any 3-year period and you can make any argument you wish, since you will find a variety of returns. Case in point: compare 1997-1999 against 2000-2002.

 

[tsptalk]

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Rolo wrote:

tsptalk wrote:

I'm always early :?.

heh...hope that's not what she said! (couldn't resist)

Early isn't bad, as long as you're there for the long term .

 

[Guest]

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I understand your reasoning about staying in long term, but you also have to understand that only a few transactions a year can make or save you a lot more money. Take 2000-20002 for example. If this had been up then, I think everyone would of said take all your money and put it in the G or F fund. You realize how much money a lot of people could of saved? I happened to throw all my money into the G fund just on a "hunch" and made about 4% or whatever those years. Most people where losing like 20%.

I'm basically just saying it's your money, everyone should keep an eye on it. I've told several co-workers about this site, don't know if they're doing anything about it, but I feel like this site is very helpful to peeps that don't know anything about the stock market. I'm usually more conservative than most so I only do maybe 1-3 transactions a month so I'm not as worried about timing as most. Just follow the trends. Very easy and I expect to out-perform every fund in the end. Just watch my account and you'll see.

I did go all C fund yesterday for today on a "gut feeliing" and am a little sorry I did. Bit worried about today. But it's a perfect example of keeping emotion out of it, and just staying with what you know.

 

[Guest]

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Pete1 wrote:

It's fairly simple really, the longer you hold a portfolio of stocks, the better the chance of achieving the historical equity premium. There has never been a 20 year rolling periodin whichstocks turned in a loss and also, over roughly 94% of the 20 year rolling periods, the worst case for stocks beats bonds and treasuries. Most of this is very well covered in Jeremy Siegals "Stocks for the Long Run." The problem for most is the daily volatility of a 100% stock portfolio. Few can stomach the day to day volatility for 20 years. A diversified portfolio of our 3 stock funds held in equal proportions since the beginningof this year would have returnedbetween 3-4% butwe have seen many swings of 2 or 3% in a single day inall of the stockfunds.The point is if you are buying and holding, don't watch the day to dayswings andif you are timing, it is very tough to beat the stock averages. Even Tom has admitted as such and has chosen to compare his return to the diversified portfolio.

With only five transactions this year I'm up about 11-13%. Just started my own TspTALK account, so we'll see how I fair from here on out. Frizz is apparently doing very well also.

Oh, thanks again Tom for putting up this site, been very helpful! :^

 

[Pete1]

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mlk_man wrote:

I understand your reasoning about staying in long term, but you also have to understand that only a few transactions a year can make or save you a lot more money. Take 2000-20002 for example. If this had been up then, I think everyone would of said take all your money and put it in the G or F fund. You realize how much money a lot of people could of saved? I happened to throw all my money into the G fund just on a "hunch" and made about 4% or whatever those years. Most people where losing like 20%.

I'm basically just saying it's your money, everyone should keep an eye on it. I've told several co-workers about this site, don't know if they're doing anything about it, but I feel like this site is very helpful to peeps that don't know anything about the stock market. I'm usually more conservative than most so I only do maybe 1-3 transactions a month so I'm not as worried about timing as most. Just follow the trends. Very easy and I expect to out-perform every fund in the end. Just watch my account and you'll see.

I did go all C fund yesterday for today on a "gut feeliing" and am a little sorry I did. Bit worried about today. But it's a perfect example of keeping emotion out of it, and just staying with what you know.

Tell me, do you predict a bull or bear market over the next 6 months? Also, what direction do you think the market willmove next week both before and afterGreenspan's June 30th speech? Also, is your system usually based on market trends withyour gut reaction to move everything to C fundan exception to your system? Your subsequent post indicates that you have achieved an 11-13% return this year with only 5 transactions and so, it seems strange that you would mess around with gut feelings. From the above post, it looks like youquestion your gut decision.

 

[Frizz B.]

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Most of my gains were in Jan and Feb., between 8 and 9 %, only up 3 % since. There was a 3 week period where I move my funds to the S fund when the differential was at 285 and the differential went down to 225. It took a while for it to come back and I ended up doing ok. The differential went to 315 and I traded back to the G fund at 313. I am looking forward to the next 6 months and see if I can out do my 12 % so far for the first 6 months.

:dude: Frizz B.

 

[Guest]

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Pete1 wrote:

Tell me, do you predict a bull or bear market over the next 6 months? Also, what direction do you think the market willmove next week both before and afterGreenspan's June 30th speech? Also, is your system usually based on market trends withyour gut reaction to move everything to C fundan exception to your system? Your subsequent post indicates that you have achieved an 11-13% return this year with only 5 transactions and so, it seems strange that you would mess around with gut feelings. From the above post, it looks like youquestion your gut decision.

I personally, and most do, perdict a bull market for the rest of the year. I will probably stay 100% in C fund till Tues. then go 100 % G till I see what happens on the 30th. A good time to get back in may be July 5th. If nothing happens over July 4th weekend, I think people will come out of their shells till about election time. Just my opinion, I follow trends not predict them after all.

Yes my recent move to the C fund was a gut feeling not based on my system. C fund is having a decent June and I was getting bored. My system actually works best when the market is up and down, as it has been all year. This sideways stuff doesn't help any. But doesn't hurt either. If the market is in an uptrend, them I'll just stay in and ride with the funds. Just have to decide which one or ones. In a downtrend, then I just go either G or F. Whichever is performing better.

Good Luck!

 

[Guest]

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Just as a footnote, I checked share prices from last year and it appears that there was some selling on July 3rd, then back up the next couple day's after the 4th. I sometimes look at past history post 9/11 instead of the more historical returns which Tom posts. I call it my "Terror Factor" basically. Does anyone know what the returns were for the same dates in 2002? I just look at share prices.

 

[tsptalk]

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mlk_man wrote:

Does anyone know what the returns were for the same dates in 2002?

This didn't copy over very well but here are the closing prices of the S&P 500 from late June / early July 2002....

5-Jul-02
989.03

3-Jul-02
953.99

2-Jul-02
948.09

1-Jul-02
968.65

28-Jun-02
989.81

27-Jun-02
990.64

26-Jun-02
973.52

25-Jun-02
976.14

 

[Guest]

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Thanks Tom. Just as I suspected. The morning of the 5th may be a good time to make a little money. Glad my "gut-feeling" came out good yesterday. <) I'm still going to stay 100% C till Tuesday I think. Go to G then and come back to stocks on the 5th.

 

[Pete1]

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MLK, congratulations on placing a good bet with the C fund yesterday It seems like you have kind of abandoned your original plan, ie, waiting to go back into stocks until Scomes back to 12.60 and I to 12.9?It seems like you may havehad to wait for awhile and so, I can see why you wanted to come back into stocks.