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Lost decade my a$$
Old 01-07-2011, 07:15 AM   #1
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Lost decade my a$$

Well if you are like me, you enjoy the entertainment value that cnbc provides. They are always touting the latest and greatest sectors of the markets with their so called experts. I for one like Jim Cramers ability to act like a clown and all his buttons of glory, and house of pain. However, if you are to watch these shows you fight a constant battle not to act on the recommendations. It just makes so much sense while they are touting the best investment strategies and the latest hot stock.

While I love the entertainment value I too have been convinced of the so called missing decade. No matter what my results actually show, I believed my portfolio was actually down over the last 10 years. What's more annoying than this is that I believe the generall population has used this as an excuse not to save for the future.

It is truly sad to read all the yahoo messages in response to the latest column from the yahoo experts about the health of the retirement funds of this country. These comments often tout that "I lost 70% in the market, no way I am investing with these bunch of crooks". However, if you rad between the lines what they are really saying is "I didn't save and am now 56, and my 40k in investments dropped to 35k, at least now I can say the responsibility lies on wall street". The more they say the crooks on wall street are the reason they have no retirement the better they feel about their neglect to save.

Well people my results are in. Last year I was up 21%. I followed the coffee house portfolio with a small twist in moving to all stocks on big dips of moe than 15%. I only did this when we had the massive crash due to a sale in stocks I had never seen in my life. I will continue to do this strategy until I retire. At that point I will move a big portion of my savings to fixed income for living out the rest of my life.

Anyway, I am still new here, but for anybody interested in the coffee house portfolio last years and historical returns are in. The Coffeehouse Investor Coffeehouse Returns

I think the key is really divesifaction and keep your core allocation fixed as buy and hold.
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Old 01-07-2011, 09:18 AM   #2
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I think I actually made good money this past decade.... heck, I am ahead the past 5 years and I think the previous 5....

Either way, because I was putting more money in the funds... the last few years earned me a lot... I think that in a few more months I will be even in earnings from the high in 2007... which means I will be way ahead when you add in savings...
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Old 01-07-2011, 10:13 AM   #3
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I'm up 100% since 2000. Most of this performance is new contributions. My tolerance for Cramer is about 15 seconds.
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Old 01-07-2011, 10:20 AM   #4
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I'm up 100% since 2000. Most of this performance is new contributions. My tolerance for Cramer is about 15 seconds.
+1

(but my tolerance for MSNBC is only 5 seconds...)
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Old 01-07-2011, 10:48 AM   #5
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I don't understand quite a lot about stocks. That said, how does one figure one is up based on new contributions? ""Started with $100. A year later added $100. Am up 100% over the last year!" ?!??

I guess you can say truthfully that you are up, but did you profit by being in stocks? Think that is the question. Our piddling little amount in stocks went up as well - but we're still down compared to 2007. Overall we are up 35% from purchase price - but that's after years and years in the market and doesn't count the losers we sold.
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Old 01-07-2011, 11:31 AM   #6
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I don't understand quite a lot about stocks. That said, how does one figure one is up based on new contributions? ""Started with $100. A year later added $100. Am up 100% over the last year!" ?!??

I guess you can say truthfully that you are up, but did you profit by being in stocks? Think that is the question. Our piddling little amount in stocks went up as well - but we're still down compared to 2007. Overall we are up 35% from purchase price - but that's after years and years in the market and doesn't count the losers we sold.
For me it is super easy. I use vanguard and it is shown right there on my overview page. They do all the calcs and give me a 1,3,5 year performance in percentage terms with all sells, addition of capital and any withdrawals taken into account.

Otherwise I would have to track it on a spreadsheet.
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Old 01-07-2011, 04:38 PM   #7
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I also do not understand why the last decade is viewed as a lost decade. Sure, there are many people who either failed to save, were unable to save or who made poor investment decisions, but on the whole the last ten years have thrown up some great opportunities.

Even conservative rebalancers should have been able to take advantage of the volatility (and the impact of falling interest rates on bond values) to do well.

The fact that a number of people on this forum managed to FIRE during this period is (to my mind) enough to debunk the suggestion that we have had a lost decade. The fact that a lot of people saved little and/or made some very bad investment decsions (or were simply unlucky) does not mean that it was a lost decade - with 90%+ employment even today the blunt fact is that most people who wanted to save and invest could have done so and improved their financial position in the process. For most, it was only a lost decade if you made poor decisions.

Then again, maybe by views are tainted by the fact that the last ten years have been very kind to our efforts to achieve FI.
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Old 01-07-2011, 04:47 PM   #8
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I saved a LOT over the past decade, and got to retire at 62 as a result. I have a great deal more money than I did 10 years ago, and it isn't all a result of additions. So... I'm a happy camper.
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Old 01-07-2011, 04:49 PM   #9
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Well... I decided to take a look...

The week of Jan 3rd 2000... the Dow as at 11,523

Closed today at 11,674 after going up for the week...


SOOOO, in a way..... this is a 'lost decade' if you had not put in any money during it...

If you were taking out money to live on... you probably are down a good bit...
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Old 01-07-2011, 06:56 PM   #10
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Originally Posted by Texas Proud View Post
Well... I decided to take a look...

The week of Jan 3rd 2000... the Dow as at 11,523

Closed today at 11,674 after going up for the week...


SOOOO, in a way..... this is a 'lost decade' if you had not put in any money during it...

If you were taking out money to live on... you probably are down a good bit...
As I posted in the 2010 thread performance thread my net worth hit an all time high this year despite not working since middle of 1999. On the other hand the CPI calculator tells me that a 1 million in 2010 only has the buying power of 787K in 2000. So I definitely felt that I was better of financially back in 2000.
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Old 01-07-2011, 07:10 PM   #11
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Well... I decided to take a look...

The week of Jan 3rd 2000... the Dow as at 11,523

Closed today at 11,674 after going up for the week...


SOOOO, in a way..... this is a 'lost decade' if you had not put in any money during it...

If you were taking out money to live on... you probably are down a good bit...
Leaving aside the Dow's deficiencies as an index, this ignores both the (rather unexciting) dividend yield and the fact that the universe of potential investments is much broader than the Dow (or any single market index). Those who held a diversified portfolio and periodically rebalanced should have also done better than that. Those who held bonds would have done much better than just holding the Dow. Those who invested in gold would have done very well. Ditto for investors in a lot of emerging markets.

Whether an investor matched inflation is another matter.....
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Old 01-07-2011, 07:20 PM   #12
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Yes, the paltry dividend yield does add a bit to the return. And accumulators and rebalancers would do OK. Heck, I do know that if the market were flat, I would not do as well as I have. So, do we really want a, ahem, flaccid market, or one that goes up and down like yo-yo so we have plenty of chances to "buy low sell high"?

Anyway, the Dow actually tracks the S&P 500 fairly well even though it has only 30 companies instead of 500. It is because they tweak it often to throw out dead companies (remember GM? Sears?) and to replace with more vibrant companies.
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Old 01-08-2011, 06:55 AM   #13
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Whether an investor matched inflation is another matter....
That's a major consideration if your return does not keep up with inflation.

The return of most stock indices was lackluster except for emergent markets. However, gold, precious metals did very well. A diversified portfolio (i.e., US large, small, international, emerging market, Gold , precious metals, bonds, etc) may have resulted in a positive annualized return over the past decade, but it's return beats inflation barely by a small margin.
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