Dow Jones, S&P 500 and NASDAQ only up 2 percent in last ten years (bonds, mutual funds)

[Refugee56]

I should have put my money in a CD. I bought a three different Index Funds about ten years ago that mirrored the S&P 500, Dow Jones, and NASDAQ. In ten years they are only up 3%. This includes dividends and the reinvestment of the dividends. Most professional managed Mutual Funds are DOWN now from ten years ago to today.

They say that over the low run people will make lots of money in the stock market. Isn't ten years the long run.

(In 15 years the Stock Market is only up 5%.) I would have doubled my money in 15 years in CD's)

[HappyTexan]

Well if you got out, let's say Sep/Oct 2007 then you would have made a good penny.
The market has dropped over 3000 points in 1 year.
The stock market has it's ups and downs..you need to know when to sit on the sidelines and wait out the bad and then jump back in.

[CouponJack]

Originally Posted by Refugee56

I should have put my money in a CD. I bought a three different Index Funds about ten years ago that mirrored the S&P 500, Dow Jones, and NASDAQ. In ten years they are only up 3%. This includes dividends and the reinvestment of the dividends. Most professional managed Mutual Funds are DOWN now from ten years ago to today.

They say that over the low run people will make lots of money in the stock market. Isn't ten years the long run.

(In 15 years the Stock Market is only up 5%.) I would have doubled my money in 15 years in CD's)

Will you bet all your money that CD's will outperform equities over the next 15 years...? Also, the reason why most mutual funds can't beat their direct benchmark over the longterm, is because of costs.

[Humanoid]

Originally Posted by CouponJack

Will you bet all your money that CD's will outperform equities over the next 15 years...?

And would you bet all your money on the opposite? This is about risk. Its easy to say after that fact that the people in CDs, bonds were stupid for not getting a higher return in the equity markets. But there is no way to know whether the equity markets will or will not outperform CDs (bonds) over the next 15 years. If you are the gambling type then you may pick the equity markets, if you're not then you'll go with very low investments like CDs, Treasuries etc that have rates that you can count on and make plans with.

[CouponJack]

Originally Posted by Humanoid

And would you bet all your money on the opposite? This is about risk. Its easy to say after that fact that the people in CDs, bonds were stupid for not getting a higher return in the equity markets. But there is no way to know whether the equity markets will or will not outperform CDs (bonds) over the next 15 years. If you are the gambling type then you may pick the equity markets, if you're not then you'll go with very low investments like CDs, Treasuries etc that have rates that you can count on and make plans with.

I know we differ in opinions on this. Comparing a diversified portfolio (ie somewhat equal mix stocks/bonds) of low cost Vanguard Funds over the long term (>20 years) to gambling, is wrong IMO.

To me, investing in MM's or CD's over one's lifetime completely is gambling to me.

We just differ in opinion.....

[Humanoid]

Originally Posted by CouponJack

I know we differ in opinions on this. Comparing a diversified portfolio (ie somewhat equal mix stocks/bonds) of low cost Vanguard Funds over the long term (>20 years) to gambling, is wrong IMO.

To me, investing in MM's or CD's over one's lifetime completely is gambling to me.

Well you can use the word in any way you want I suppose. But I'm referring to the dictionary definition:

"to stake something on a contingency : take a chance"

But what exactly is the gamble in the case of CDs? You know exactly what the return is going to be when you put your money in one. What did you gamble on? Nothing.

On the other hand a portfolio whether its diversified or not, or whether its in low cost mutual funds or not is a gamble. You are taking a chance. Nothing is guaranteed even in principle. You are hoping that past performance replays itself or whatever else.


Anyhow, to the OP. Most modern investment theory is based on the market's performance of the last 30 years. The various recommendations on how to diverse your portfolio all tend to look backwards. Its almost odd that there is so much focus on the past when the market is in no way forced to repeat that experience. I sold most of my equities a year ago and it is at least my view that the market will continue to decline and will be relatively flat for some time. We are after all about to at best enter in a longish recession.

[skytrekker]

The period from 1966-1982 is likely to repeated, or also the the period after market highs in September 1929, not again reaching those highs till 1953.

An aging population, soaring health care costs, massive consumer debt among other social and economic ills will see market performance in the coming years to probably be at most 3-4% a year.

[cpg35223]

Well, if you look at the incredibly inflated stock market numbers from the late 1990s, it's a pretty hard benchmark to maintain.

[jimj]

Originally Posted by Humanoid

Well you can use the word in any way you want I suppose. But I'm referring to the dictionary definition:

"to stake something on a contingency : take a chance"

But what exactly is the gamble in the case of CDs? You know exactly what the return is going to be when you put your money in one. What did you gamble on? Nothing.

On the other hand a portfolio whether its diversified or not, or whether its in low cost mutual funds or not is a gamble. You are taking a chance. Nothing is guaranteed even in principle. You are hoping that past performance replays itself or whatever else.


Anyhow, to the OP. Most modern investment theory is based on the market's performance of the last 30 years. The various recommendations on how to diverse your portfolio all tend to look backwards. Its almost odd that there is so much focus on the past when the market is in no way forced to repeat that experience. I sold most of my equities a year ago and it is at least my view that the market will continue to decline and will be relatively flat for some time. We are after all about to at best enter in a longish recession.

I don't think it's such a gamble if you take all the self serving crooks out of the mix who've been rigging the "game" as it were for the last few years. With derivitives,puts,naked shorts and hedge funds to name just a few IMO we've allowed the market to be mutilated and morphed into something that has become a high stakes gamble with the real rules only known to the select few at the top and changed as they saw fit.
This has become alot like a Bacarat game where you can bet on the house or the players hand but you have a thick pair of glasses on so you can't really see the cards clearly and have to depend on the "dealer" to tell you what they are and then they will lie from time to time and change the rules when you come too close to winning big or one of their friends show up. Now they will let you win quite a few if you tip very well (contribute) and the better you "tip" the more you'll make out of the next hand.
A sad state of affairs, I think it's time to get rid of the dealers...

[GregW]

The market is reflecting the actual and not the perceived economy. We have sold off most of our ability to create wealth (farms, mines, manufactories) over the last 20 years to keep the casino operating. I will not be surprised if it continues to drop. Party is over folks. We need to invest whatever we have left into wealth creating things not elaborate and expensive housing and fancy financial deals.