Tradefair & Financials
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Heres something that will make you raise your eyebrows.
I was looking at a 5 year chart of the All ordinaries- the australian stockmarket
end of february each year
2005- 4220
2006-4893
2007-5786
2008-5658
2009-3345
2010- 4560- current.
Now lets check the returns if you bought in 2005
5 year return- 340 points or 8% or 1.6% per year
bought 2006
4 year return--minus 333 points or minus 1.7% a year
bought 2007
3year return- minus 1220 points or minus 7% per year
bought 2008
2 year return-minus 1098 points or minus 9.7% per year
bought 2009
1 year return-1215 points or 36.3% per year
whats the moral here?
1.Long term investing is clearly a joke of an idea.
2.Buying after a long steady rise is a losers concept. ie "the peak"
3.Buying after a large,even better massive fall will provide a sensational return
In fact had you waited for the right moment- a huge fall and bought , your returns in one year exceeded by a mile your total returns for 5 years.
Now before the smarties scream"what about the div's" I say consider the opportunity cost of capital.Consider the anguish of being underwater for years had you bought anywhere near the peak.
Now consider that in australia we are told superannuation is the way to a comfortable retirement, the above numbers say the opposite.
I was looking at a 5 year chart of the All ordinaries- the australian stockmarket
end of february each year
2005- 4220
2006-4893
2007-5786
2008-5658
2009-3345
2010- 4560- current.
Now lets check the returns if you bought in 2005
5 year return- 340 points or 8% or 1.6% per year
bought 2006
4 year return--minus 333 points or minus 1.7% a year
bought 2007
3year return- minus 1220 points or minus 7% per year
bought 2008
2 year return-minus 1098 points or minus 9.7% per year
bought 2009
1 year return-1215 points or 36.3% per year
whats the moral here?
1.Long term investing is clearly a joke of an idea.
2.Buying after a long steady rise is a losers concept. ie "the peak"
3.Buying after a large,even better massive fall will provide a sensational return
In fact had you waited for the right moment- a huge fall and bought , your returns in one year exceeded by a mile your total returns for 5 years.
Now before the smarties scream"what about the div's" I say consider the opportunity cost of capital.Consider the anguish of being underwater for years had you bought anywhere near the peak.
Now consider that in australia we are told superannuation is the way to a comfortable retirement, the above numbers say the opposite.
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Replies: 35
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Now do the same from 1980. I think you will find you are wrong.
Superannuation is based upon 40 years of investment, not 5 - and the 5 of the biggest stock market crash for a while. To be completely fair, you should also compare stocks to a basket of other investment types. Like property? |
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What would the returns look like if u assumed evenly spread investments over 5 years/4/3/2..
much like a pension where u pay regularly.... |
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Five years is not long term.
Have you included takeovers? Have you included re-invested dividend income? Have you included companies that have gone bust? |
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considering 5 years to be 'long term' - schoolboy error
ignoring dividends - schoolboy error |
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what a waste of time to do all that research and then post that cr@p
there are a lot of stocks out there and to generalise them is ridiculous |
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5 years = long term hahahaha **ing hell
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Right now, the FTSE is at 5,270. Very different from the 'current' figure in the OP.
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aussie stocks wur
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2.Buying after a long steady rise is a losers concept. ie "the peak"
so buying at the peak is a bad idea. thanks for that stunning insight |
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Wasnt the Footsie around 6900 on new years eve 1999??
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surely fishing? long term - 5 years, talk about manipulating stats to show what you want!!
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Mr B
What is going on?? You should know better! |
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What do some on here consider "long term", somewhere in between the day before one dies and the precise moment that the sun goes supernova?
If you are still blind to the fact that "buy & hold" is a losing strategy you have no business trading equities. |
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If you are still blind to the fact that "buy & hold" is a losing strategy you have no business trading equities.
Umm, I think you need to qualify that. It's a losing strategy in a bear market. |
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mmm evoked a lot of responses.Most of them pretty basic.I did'nt realise there were so many shallow thinkers here.
superannuation- if your are 40 yrs old super is NO LONGER a 40 year investment spread the investment over 5 years in even amounts- close enough to say the return is approx 1.8% a year, not including divis re divis,divi re investment- there is a cost to re invest,ie the opportunity cost of investing in something with higher returns.Why put your dividend cheque into 1.8% when cash is returning 4% after tax? subversion- your usual dikhead comments.Suggest you go back to the training camp. Sir Denis Eton-Hogg 17 Feb 23:34 2.Buying after a long steady rise is a losers concept. ie "the peak" so buying at the peak is a bad idea. thanks for that stunning insight- thats how stocks got to peak SirDenis, plenty of people bought there and the 1000 points under it as well. there are a lot of stocks out there and to generalise them is ridiculous- errrrr this is the composite index of ALL stocks, like ftse,dax,cac,do you understand the concept? " buy and hold" 10 year return approx 4.5% without divs, how much longer do you want to hold for to prove buy and hold works?Taking a 20 year horizon to suit your view is no different to taking a 5 year . A few points I would like to make-I would hazard a guess to say most of the posters here are over 30 yo with plenty over 40 yo, the older you get the more nebulous "long term" becomes. How many of us are being suckered into this long term con?Why do I have to hold onto something for more than 10 years to see a return? Look at it this way. I put in 100,000$ today 2010 how much will that be worth all up in 2020 including divis? Based on the last 10 years it will be worth approx 45% more plus divs. However if I put my money into cash for 10 years what will it be worth?The after tax return in aust at the moment is about 4% but what will it average over the next 10 years?I would venture that it will average higher than that lets say 4.5% plus compounded interest.Remember I can compound the interest in the same way as divi re-investment. If I buy a house now, although I would have to take a loan if I only have 100k and sell that house in 10 years what will be the total return?Thats a tough one to work out. Point being that shares are NOT returning much above cash. Is property returning above cash?I have'nt tried to work that one out. For all the warnings about inflation eroding cash so you should buy hard assets instead have those hard assets given any real returns above cash? For stocks certainly no. Opportunity cost- when dealing with reasonable amounts the impact of opportunty cost can be substantial. It seems that of all the posters only 2 people are NOT a suckers Menelaus 18 Feb 06:07 What do some on here consider "long term", somewhere in between the day before one dies and the precise moment that the sun goes supernova? If you are still blind to the fact that "buy & hold" is a losing strategy you have no business trading equities. Spot on comment- buy and hold is a con. zilzal1 18 Feb 02:12 Wasnt the Footsie around 6900 on new years eve 1999?? currently 5276.But wait we have to go 20 years to make it profitable , right? get real people. In the long term stocks stink. |
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mmm evoked a lot of responses.Most of them pretty basic.I did'nt realise there were so many shallow thinkers here.
superannuation- if your are 40 yrs old super is NO LONGER a 40 year investment spread the investment over 5 years in even amounts- close enough to say the return is approx 1.8% a year, not including divis re divis,divi re investment- there is a cost to re invest,ie the opportunity cost of investing in something with higher returns.Why put your dividend cheque into 1.8% when cash is returning 4% after tax? subversion- your usual dikhead comments.Suggest you go back to the training camp. Sir Denis Eton-Hogg 17 Feb 23:34 2.Buying after a long steady rise is a losers concept. ie "the peak" so buying at the peak is a bad idea. thanks for that stunning insight- thats how stocks got to peak SirDenis, plenty of people bought there and the 1000 points under it as well. there are a lot of stocks out there and to generalise them is ridiculous- errrrr this is the composite index of ALL stocks, like ftse,dax,cac,do you understand the concept? " buy and hold" 10 year return approx 4.5% without divs, how much longer do you want to hold for to prove buy and hold works?Taking a 20 year horizon to suit your view is no different to taking a 5 year . A few points I would like to make-I would hazard a guess to say most of the posters here are over 30 yo with plenty over 40 yo, the older you get the more nebulous "long term" becomes. How many of us are being suckered into this long term con?Why do I have to hold onto something for more than 10 years to see a return? Look at it this way. I put in 100,000$ today 2010 how much will that be worth all up in 2020 including divis? Based on the last 10 years it will be worth approx 45% more plus divs. However if I put my money into cash for 10 years what will it be worth?The after tax return in aust at the moment is about 4% but what will it average over the next 10 years?I would venture that it will average higher than that lets say 4.5% plus compounded interest.Remember I can compound the interest in the same way as divi re-investment. If I buy a house now, although I would have to take a loan if I only have 100k and sell that house in 10 years what will be the total return?Thats a tough one to work out. Point being that shares are NOT returning much above cash. Is property returning above cash?I have'nt tried to work that one out. For all the warnings about inflation eroding cash so you should buy hard assets instead have those hard assets given any real returns above cash? For stocks certainly no. Opportunity cost- when dealing with reasonable amounts the impact of opportunty cost can be substantial. It seems that of all the posters only 2 people are NOT a suckers Menelaus 18 Feb 06:07 What do some on here consider "long term", somewhere in between the day before one dies and the precise moment that the sun goes supernova? If you are still blind to the fact that "buy & hold" is a losing strategy you have no business trading equities. Spot on comment- buy and hold is a con. zilzal1 18 Feb 02:12 Wasnt the Footsie around 6900 on new years eve 1999?? currently 5276.But wait we have to go 20 years to make it profitable , right? get real people. In the long term stocks stink. |
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err sorry about the double post.
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madasahatter 17 Feb 16:17
If you are still blind to the fact that "buy & hold" is a losing strategy you have no business trading equities. Umm, I think you need to qualify that. It's a losing strategy in a bear market. I don't need to qualify anything. The inevitability of ever-more-frequent and drastic boom-bust cycles make a buy & hold strategy a loser. Saying it only applies to bear markets is not seeing the forest because of the trees. |
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It's a bit crude but Yahoo chart the dow back to 1930. It clearly shows that the last decade has been a loss for a buy and hold strategy but I wouldn't complain if that was my strategy for the 80s or 90s especially not if I'd gone "long-term" and bought and held for both. Twenty years is a long time for stocks to pretty much just go up, even the 1987 drop now looks like a blip, this will have had the effect of ingraining this philosophy into the conciousness. I bet you would have found a lot more consensus for your view in 1980 after the stock market had barely budged for 20 years. but maybe not in 1960 when stocks had enjoyed a reasonable 20 years of growth.
In fact looking at the dow chart there certainly seems to be a Biblical type pattern of 20 years of fat followed by 20 years of lean so my Joseph like advice is steer clear of equities until 2020 then pile in and hold til 2040. Of course this all depends on how long your long-term is. |
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PMSL MrBen, your arguments about dividends are laughable, especially over the long term
i guess i should ignore dividends from my tobacco holdings eh? 50% + return over 10 years from the yield alone? you think this should be disregarded? schoolboy. error. try again, MrBen |
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look for compound effect of dividends Mrben
you might get somewhere |
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As a point of interest the compound after tax returns of cash
4.5%= 5.5% average over 10 years 5%= 6.3% 6% = 7.9% At no point in this 10 years are you underwater on your capital.Unlike stocks. |
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well done MrBen, you are learning that cashflows on investment instruments should not be disregarded when calculating returns
keep it up, you'll go far |
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keep commenting subversion, its always worth a laugh.By the way, which one of the brothers are you? Dumb or dumber?
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don't worry MrBen, you've given plenty of people on this forum a very good laugh with this thread :D
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lololol, your just too easy subversion.you have so many buttons to push. you have to have the last word due to you personal insecurities, dont you?Its a pity you never have anything to say except to critisize others.Tell you what- how about YOU start a thread? Something interesting ok? oh but wait, you can't can you? Because you dont have an original thought in your head do you?You cant analyse anything can you?You can only repeat what they told you at the training camp or your indoctrination education system- cant you? You can only copy, repeat, copy, repeat, copy,
So how about it subversion, lets see your thread.Put some thought into it and try not to steal someone else's idea.Try to do it b4 christmas ok? |
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will anyone give me even money for a thousand that subversion both replies and starts his own thread? PLease an even thousand.
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and bump!!!
my accuracy is uncanny  all ords today is 4300 less than feb 2010 and 100 points better than feb 2005 those who argued against me- again proven wrong.  |
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What else is there to say, subversion said it all:
subversion Joined: 07 Aug 03 Replies: 3997 19 Feb 10 02:45 don't worry MrBen, you've given plenty of people on this forum a very good laugh with this thread :D |
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where would warren buffett be if he stuck his money in a bank savings account?
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xmoney- those days are well and truley over.The vast bulk of buffetts gains came a long time ago.His major income these days come from writing calls and puts against his holdings.
try not to be such a sucker for the commonly held view. |
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i couldnt afford one buffett share anyway
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mrben
wouldnt pound/cost averaging into index tracker would show a decent profit? |
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xmoeney- I would say possible yes. Certainly it would take advantage of the huge dips. But you would have to calculate according to how long the market was high.
It would be a worthy calculation to get say 30th of the mont figues for a particular stock over say the last 10 years and see what the result was. |
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"possible yes"
Yeah, got it.......possibly, perhaps, may be, as the case may be, conceivably, for all one knows. It's hard to believe this half-wit is from the same place as Steve Keen.  |