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Right...and your returns will be anemic as a result.
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Originally Posted by Teak
As a buy-and-hold sucker, actually, a dividend investor, the yo-yo pattern does not bother me. I will let the dividend payments come in and compound through reinvestment.
Dividend payments are pretty pathetic nowadays, there is a general preference for capital gains due to the tax structure.
One can ignore the volatility in the market if they don't plan to sale their equities anytime soon, but at some point you will need to sale and when that time comes the volatility in the equity markets will take center stage.
Its not that buy and hold folks are necessarily going to lose tons of money, its just that they are going to get pathetic returns in real terms. Furthermore, buy and hold folks like to point to the last 2-3 decades of market behavior as if it has any predictive value at all. But it has none, the dynamics are going to be rather different going forward. Those that invest with their eyes on the past are suckers.
But seriously, in what way does it make sense that you should get a good return by merely purchasing some crap and holding it?
Let's see. The crash of 8-10 months ago was from the bubble popping that was created by:
Lowering the cost of money to 1%/year
No regulation on the finance industry
Endless encouragement for people to consume as much as possible
Off shoring of middle class jobs to improve corporate profits
Two unfunded wars
What was the solution to fixing the above?
Lowering the cost of money to 0%/year
Handing a trillion+ dollars to the finance industry with no regulation
Federal government borrowing money to give to people to consume as much as possible
Off shoring of middle class jobs and huge layoffs to improve corporate profits
War escalation, still unfunded
The definition of insanity is to repeat the same action over and over and hoping for a different result. Money in the market right now is a gamble and nothing else. I have no idea when it will fall again, but I would not bet that it will last much past the first Tuesday in November 2010. Better have a plan for that.
Right...and your returns will be anemic as a result.
Wow. You are quite prescient to know this in advance, eh?
Quote:
Dividend payments are pretty pathetic nowadays, there is a general preference for capital gains due to the tax structure.
Huh? What is your source to prove that there is a preference for capital gains due to the tax structure?? When then-President Bush put into effect cuts on dividend tax rates, companies had a greater incentive to pay out dividends. These tax cut rates will either expire in 2011 (I think), or else the Democrats will kill them a year early -that seems to be Pelosi's plan- but they worked well enough for the time period in which they were in effect.
Let me take a look at some of my current dividend return rates:
BHP 5.67% (on my cost basis)
CVX 5%
ENB 3.5%
ETN 3.5%
MO 7.6%
KMB 4.3%
Hmmmm, those don't look too bad compared to the return on real estate (which has to be sold), gold (which has to be sold), bank savings accounts (~0%), or CDs (1-2%). And the main point is that, as a buy-and-hold sucker, I don't need to sell the shares in order to achieve the stated returns!! It is truly amazing. I will get paid again next year, and the year after that, and the year after that, and the year after that, and ......
So tell me, oh wise one, what should we buy-and-hold suckers put our money into, if not companies that are weathering the recession fairly well, and continue to pay out dividends (and raise dividends)??
Not really waiting since I doubt that you have much skin in the game anyway....
Quote:
But seriously, in what way does it make sense that you should get a good return by merely purchasing some crap and holding it?
He has a couple of mutual funds he manages. Since 2000 he's averaged 8.5% a year. which probably isn't bad for a stock fund over that period. Then again, 8.5% sucks if you ask me. I certainly know many who do much, much better and they don't have a clue what next year will bring so I doubt this guy odes either. But bold predictions get you published in the press and the free PR is valuable. You just have to take it for what it is.
Hummm, but what makes more sense...A) He is this super genius that some how finds positive results during two bad turns...or B) since he started in managing funds he has managed the low risk/low yield funds that survived the best over that period of time.
I was just saying, and I won't begrudge him free PR, that if he was really smart and knew the future he would have seen the crash and recovery and made much better results off of it. Heck, even I am averaging 25.2% from 2005 to now on funds picks.
I'm on the fence. I'd hate to see another depression but we are 2 years into this and none of the bad regulations have been fixed. Why not ? Why let the banks continue doing this ?
Cause Obama is still president and hasn't pushed for serious financial reforms (apparently he lied about them being problems since he isn't fixing them)... instead he is busy with his own agendas... meanwhile he is investing loads of cash in JP Morgan... I wonder what JP Morgan/Chase role will be in the future...
Due to the system trouble, Tokyo Commodity Exchange, Inc. (“TOCOM” or the “Exchange”) today halted the trading sessions for gold standard, gold mini and gold options contracts at 17:10.
well, let me get this straight... you're a Trader and saying that he is 99% wrong.
Is this just like those PhD economists that were saying the economy is super strong and the chance of a crash are zero back in 2006?
Or is it like the experienced Realtors that said Real Estate is never going to crash in 2006?
Even if you are a Trader why should we believe you... give some facts/arguments to back up your claims.
Who said you should believe me? I don't know what the future holds and my annual returns are more than 10X this bozo over the same period.
As far as facts and agruments, well the chances of a real market crash in this day and age are almost non existant for one. A long steady decline to crash like numbers is possible, but given that Ben is a student of the depression I suspect he's more than aware of 1932. Other than that your on your own buddy boy. My job is to fleece you blind not to hold your hand.
Hummm, but what makes more sense...A) He is this super genius that some how finds positive results during two bad turns...or B) since he started in managing funds he has managed the low risk/low yield funds that survived the best over that period of time.
I was just saying, and I won't begrudge him free PR, that if he was really smart and knew the future he would have seen the crash and recovery and made much better results off of it. Heck, even I am averaging 25.2% from 2005 to now on funds picks.
If he was really smart he wouldn't be making wild azzed predictions.
If he was really smart he wouldn't be making wild azzed predictions.
That and he would be laughing his butt in his PJ's as he scores another billion dollars instead of getting a salary playing with other people's money trying make them rich (and making under half the market results at that).
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