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re: Investing for the long term
Posted on 8/5/11 at 1:21 pm to tirebiter
Posted on 8/5/11 at 1:21 pm to tirebiter
quote:That isn't relevant since the market from 1999 to now has averaged about the same as in 1999. If your money was invested with a uniform distribution over that time, it would average out about the same as if you stuck it all in the market in 1999.
Very rarely do investors invest all the money they will ever invest in the market on one certain date.
Now, I am neglecting dividends, which I would assume over the entire market is between 1 and 2 percent, but that is a straight guess.
I would also guess bonds have performed better over the last decade, however the "historical knowledge" of getting 8% to 10% return over the long term will require some major gains in the next 10+ years to stay true.
Posted on 8/5/11 at 2:07 pm to eelsuee
quote:
If your money was invested with a uniform distribution over that time, it would average out about the same as if you stuck it all in the market in 1999.
Totally disagree, equity returns are anything but normally distributed. You also are discounting the bull market run up of the late 80's to 2001 when the tech sector blew its wad and 9/11 occurred, PE's were over 45 and companies were being sold for vast sums on a pre-revenue basis (not pre-profit, pre-revenue). Anyone starting to invest in 2002, or avoided the tech sector in 2000 and had a value oriented investment style as part of a diversified plan, would have done magnitudes better.
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