A Bit of Investing Perspective

8 Responses to “A Bit of Investing Perspective”

1. 1
   Paul Says:
   September 20th, 2008 at 8:58 am

   Yes, but a 44% gain over 10 years is only 3.7% a year, on average.

2. 2
   Watkins Says:
   September 20th, 2008 at 9:18 am

   ["So… Keep things in perspective. It’s not all doom and gloom. Then again, the end-of-week rallies are likely to cost us taxpayers hundreds of billions of dollars. Hmmm…"]

   ….more like TRILLIONS of dollars long-term. Aren’t you glad you voted for Bernake & Paulson to plan and control the U.S. economy (?) Notice that your next leader (McCain or Obama) didn’t have a clue about the huge economic turmoil this past week ?

   It should be clear by now that America does not have a ‘free’ market economy — unelected & unaccountable government bureaucrats {like Bernake} exercise vast arbitrary power over us ‘freedom-loving’ citizens.

   Bernake’s “private” Federal Reserve central-bank is not authorized under our U.S. Constitution and therefore operates entirely outside fundamental American law. Bernake asserted his assumed power to nationalize any private company or industry he chooses.
   Breathtaking events in our ‘republic’.

   Congress didn’t appropriate the necessary funds for the bailouts, nor did the President act to adjust existing Federal funds to cover these huge government commitments. Where will the money come from {??} … Bernake and his FED can & will ‘create’ all the Dollars they want — it’s called the hidden-tax of inflation.

   Your elected representatives should be outraged by all this, but they are merely passive observers of the vast Bernake market interventions, relieved that they can hide on the sidelines and duck responsibility.

   AIG will, of course, collapse, despite the Fed’s injection of car-loads of phony Dollars. And Bernake is quite willing to cover the financial losses of many other seriously distressed companies. American citizens are now on the hook for liabilities in the Trillions. The AIG takeover doubled the nominal U.S. Deficit overnight — and true long-term Federal liabilities now exceed $60 Trillion.

   Fasten your economic seat belts — it is indeed ‘doom and gloom’ for free markets, sound money, average citizens, and the grandchildren of average citizens.

3. 3
   doug Says:
   September 20th, 2008 at 10:44 am

   Yeah, let’s put it into perspective: 78 million boomers will retire over the next couple of decades. I wonder where they will get the money to live off of? Oh yeah, they’ll pull the money they have OUT of the market.

   The other part of their retirement comes from social security, hmmm. who pays for that? Oh yeah, higher taxes on everyone else.

   Medicare? Medicaid? Higher taxes.

   If you think the market is going to rally long term from here, you need to stop smoking pot. The Dow *may* provide great returns if you plan on retiring in the year 2120 but I suspect you’ll be long dead by then.

4. 4
   LAL Says:
   September 20th, 2008 at 6:37 pm

   3.7% for 10 years isn’t great. Better off in something else maybe. Ouch.

5. 5
   Randy Says:
   September 20th, 2008 at 8:47 pm

   Index returns over the last 10 years have not kept pace with their long-term averages, which is why I ditched index funds a few years ago and started investing in individual stocks. With appropriate due-diligence, it’s possible to identify picks that will outpace the rest of the market.

6. 6
   nickel Says:
   September 20th, 2008 at 11:41 pm

   LAL: What do you suggest? Keep in mind that this number assumes that you bought at the beginning of ten years and added nothing in the interim. That period included the .com bust as well as the recent turmoil. Also keep in mind that these earnings would be taxed as capital gains, as opposed to interest (comparing to something highly conservative like CDs that would’ve produced similar numbers).

7. 7
   kitty Says:
   September 21st, 2008 at 9:42 am

   “AIG will, of course, collapse, despite the Fed’s injection of car-loads of phony Dollars. ”
   Why are you so sure that AIG will collapse? AIG is the biggest insurer in the world. It had an immediate cash flow problem because it couldn’t quickly sell assets to meet its obligations that increased after its credit rating was cut, but it did have assets which were worth more than the bills. There are parts of AIG business that are sound and are still making money. And if AIG doesn’t collapse, the government will receive 10% interest on a loan. The loan is secured by parts of AIG that are still profitable and can be sold. If AIG does well, the taxpayers will get a profit. I am not arguing, I am honestly interested in your reasons behind being so sure that AIG will collapse anyway. Have you seen their balance sheet? Do you know the value of their assets? Also, what would your alternative have been? AIG bankruptcy would’ve been pretty disastrous to the world economy and in turn our jobs.

   Also, historically government bailouts haven’t been all bad. I just read – and please correct me if I am wrong – but when government bailed out Chrysler in 1980, it actually got profit on stock options it in exchange of loans.

   I agree that the fact the government took over running the company is more than a bit scary, but it seems like people that are put in charge are competent – the guy who is put in charge of AIG used to be a CEO of Allstate.

8. 8
   LAL Says:
   September 21st, 2008 at 8:38 pm

   I like index funds. Though right now we’re testing more ETFs, to take advantage of sector funds. And trying to get more return while being diversified.

   Also I realize that the 90s were unique because of the explosion of the internet. At that rate maybe paying off the house would be more attractive if you had an 8% mortgage in the 90s.

   Although I would still be stuffing money into a 401k and IRA first and foremost. Most people don’t maximize retirement saving vehicles. Which makes savings into taxable accounts a moot point.