Jump to content

Dow closes worst year since 2008


Recommended Posts

It's a brave man who believes he can time the share market. But just looking at the DJI, a person who invested all his money in a Dow Jones Index Fund at its peak in October 2007 when the Dow Jones Index was 14,164, (the highest the indexed reached pre-GFC) would have seen his investment increase, as the Dow Jones Index is now 17,425.

 

Not a great return, but a higher average return than fixed interest from a bank.

 Unfortunately true.  The government is economic engineering the economy, and by limiting avenues to invest drive investors into the stock market, thus the over inflated stock market.

  • Like 1
Link to post
Share on other sites
Oz Jon

.........Discount brokers run the risk of giving the investing public the impression stockbrokers do absolutely nothing for the investor except .........

Well, I use discount brokerages in the US and Oz - I have no idea who the "broker" is. I don't think there is one? - just a bit of computer software - available 24/7 for US10 to A$15 per transaction. I haven't spoken with a human broker for more than 15 years!

 

You are right that broker's (are there any left?) interests are in making transactions - little to do with the quality of their advice

 

I make all my own investment decisions, influenced by very good advice* from "Motley Fool" <www.fool.com>

Those MF guys have an excellent track record and general investing advice for mid/long-term investing.

Steady year by year average gains with big gains last year. Flat to date this 1/2 year, after pulling out cash to live on. [Oz financial year is Jul-Jun]

 

You can check out MF's track record - it's fully recorded with every win/lose recommendation they have ever made over many years - something you will not get from brokers or most (any?) other financial advisers!

 

MF (and I) regard short-term investing as little more than gambling against people/organisations with far better information and resources than the average investor has (and even with those advantages, many of them are not very good at it). Some individuals do OK at it, but many lose badly. Its a "some win-others lose" game.

 

With longer-term investing, you are buying a piece of a good company and having their management/business work for you.

 

Short-term, the market goes up and down, but longer term (10+ years) it keeps going up at better than 8%pa.

 

* I subscribe to their (US and Oz) SA and RB services - very good value for the money. There is a lot of free stuff too.

Edited by Oz Jon
  • Like 3
Link to post
Share on other sites

My very first stock purchase netted a loss of about 50% in a period of two years. I learned some very valuable lessons thru this ordeal. One thing I learned is the stock broker is working for one thing, A COMMISSION, not my best interests. He makes money no matter what and for the most part could care less if I make money or not. The more he can get me to buy and sell the more money he makes although I could very well be losing on each transaction. Lesson learned.....don't trust a broker.

Most mutual funds have so many fees that it is virtually impossible for the stock owner to make money.....while the management makes lots of money.

Lesson learned......if you don't have control of your investment you could very easily lose.

For me the only way to do very well in an investment is buy low and sell high. This means going against conventional wisdom at the time or being a contrarian. There is a saying, "either be a contrarian investor or be a victim."

Those that say you can't time the markets are full of crap. Their reason for saying that is there would no commission for them if you are not trading.

The average market cycles for past years has been 3.9 years or thereabouts. The Fed is attempting to smooth out the normal cycles which could lead to disaster....not sure what that would be. The Dow Jones is only 30 stocks, all "blue chip" stocks and may or may not represent what the economy is doing. Of the 30 stocks listed only one, GE, is part of the original 12 stocks.

Many people, myself included, look at the Dow and give too much credence to its pricing.

Of the approx 4 trillion dollars pumped into the economy by the Fed since 08 almost none has trickled down to main street America. It is on the books of banks that have large deposits with the Federal Reserve. Keep in mind that many of these banks such as Goldman Sachs are also brokerage firms. The main beneficiaries to the rise in stock prices has been the major banks and wall street.

The increase in stock prices is not always indicative of what is actually happening in the economy at large as there are some companies that have not produced a profit yet their prices are high, (amazon).

My preferred investment is real estate, buy low and collect on the income stream.

  • Like 2
Link to post
Share on other sites
mikewright
Those that say you can't time the markets are full of crap. Their reason for saying that is there would no commission for them if you are not trading.

 

I always thought the saying was , "it's about time in the market, not timing". It suggests that the chances are you will be better off the longer you hold stock (which would incidentally result in less trading and therefore less commission payable to brokers).

 

There's a good article about this here, which has historical data regarding time in the market.

https://www.betterment.com/resources/investment-strategy/portfolio-management/its-about-time-in-the-market-not-market-timing/

Edited by mikewright
  • Like 2
Link to post
Share on other sites
Guest
This topic is now closed to further replies.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use, Privacy Policy and Guidelines. We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue..

Capture.JPG

I Understand...