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new money did okay but the point is our old money was pretty dead on the vine.
fast forward to today where we are breaking new highs again. with everything you accumulated at this point that may see very little if we duplicate that again for another 15 years. , new money could be like peeing in the ocean at this stage unless you don't have the bulk of your money invested at this point.
eventually everyone who invests reaches a point where the bulk of their money is already invested . new money is nice but without that old money growing the wind is out of the sail.
as i said if anyone ever told me that the balance back in 2000 in a total market fund would earn less than the old passbook savings account over the next 15 years i would have thought they were nuts, but yep it happened.
Last edited by mathjak107; 11-06-2014 at 04:16 PM..
new money did okay but the point is our old money was pretty dead on the vine.
fast forward to today where we are breaking new highs again. with everything you accumulated at this point that may see very little if we duplicate that again for another 15 years. , new money could be like peeing in the ocean at this stage unless you don't have the bulk of your money invested at this point.
eventually everyone who invests reaches a point where the bulk of their money is already invested . new money is nice but without that old money growing the wind is out of the sail.
as i said if anyone ever told me that the balance back in 2000 in a total market fund would earn less than the old passbook savings account over the next 15 years i would have thought they were nuts, but yep it happened.
I understand your point but human emotion often includes the entire portfolio new and old.
Not to mention names but some folks have a knack for looking at events from a negative perspective. We could also think about what happened in the past 20 years. At the beginning of 1995, the DJIA was less than 4000. Let's see 17500 - 4000 = 13500 And 13500/4000 = 3.4. A 340% increase in 20 years sounds pretty good. And don't forget the dividends on top of the growth in the Dow.
We can go back to 1926 too and track things and get some real nice returns. But all that matters is your own entry and exit points and those are the only ones that count.
In my own case i sold a co-op back in 1987 and threw 6 figures in to the markets back then. That was a lot of money back then.
We had amazing growth through the 1980's to 2000. Double digit returns.
But that growth stalled out from 2000 on and that big chunk of dough sat dead for many many years.
It was the gains prior that made the averages still look good.
17 years of almost 14% average compounded returns made returns still look respectable from 1987 right through 2000 and even up to date.
But the value added from 2000 on to that money was tepid at best and in infact what it contributed to the overall pot on that dough sucked since most of that value was gotten prior to 2000.
It reminds me of an athlete who still has some impressive lifetime averages but the bulk were earned well in the past and the residuals are still lifting up poor statistics today still making them look good.
All that matters in the end is your results not what markets did in theory.
Last edited by mathjak107; 11-06-2014 at 05:24 PM..
Around 2000 I had most of my portfolio in bonds and other fixed assets. From 2006-2009, I had a major amount of my portfolio in cash (CDs and bank accounts). I went back to the market in the summer of 2009. I have been in the 50-60% allocation range since then.
You keep writing about sticking to a plan regardless of the economic trends. You can see why I believe otherwise. I am all for diversification and trying to minimize any major unexpected event but I strongly believe it is wise to react to economic trends. Trends means objective analysis not speculation, not emotional responses, not expecting the future to follow the past trends. Tough to do but more than worth the effort.
Small investors as a group aren't very savvy. (And I might be stating that too kindly.)
Recreational tennis players as a group pretty much stink too, but that has no bearing on my ability to play upper level club tennis.
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