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stocks very poor last 10 years
Old 03-27-2008, 04:20 AM   #1
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stocks very poor last 10 years

according to morningstar the widely followed s&p 500 index which accounts for 1/2 of the 1 trillion bucks of all the money invested in index funds has returned an average of just 1.3% a year including dividends over the last decade.

it was the worst performing of 9 different investment vehicles tracked by morningstar including treasuries.commodities,bonds,real estate to name a few ..

shows us how important it is to diversify and cover as many asset classes as we can, and to use managed funds along with your index funds as most of the higher rated managed funds beat that return. it also shows us dont count to heavy going forward on those average returns approaching double digits
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Old 03-27-2008, 05:33 AM   #2
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Also shows how a huge bubble is likely to cause terrible returns over the decade following it. If you want to see something even more interesting take a look at large growth
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Old 03-27-2008, 07:25 AM   #3
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Yup, we're in the lost decade. The Wall St. Journal had a big article on this recently.
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Old 03-27-2008, 07:52 AM   #4
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Old 03-27-2008, 08:09 AM   #5
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Shows why you don't put all your eggs in one asset class. If you diversified your stock holdings into other than large cap U.S., you'd be much better off.
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Old 03-27-2008, 09:05 AM   #6
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shows us how important it is to diversify and cover as many asset classes as we can, and to use managed funds along with your index funds as most of the higher rated managed funds beat that return.
eh, exactly where does it show that "most of the higher rated managed funds beat that return?"
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Old 03-27-2008, 09:11 AM   #7
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what is the point in diversifying when some of these asset classes are dead money for years or decades at a time? most decades commodities have negative returns or single digit returns for a decade at a time and not per year.

good thing is that historically these cycles run in a regular pattern so that you can buy these assets when the right time comes. most of use will experience two of these cycles in our lifetimes. we have to remember our lesson this time or read some books on financial history to get a good perspective
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Old 03-27-2008, 09:22 AM   #8
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what is the point in diversifying when some of these asset classes are dead money for years or decades at a time?

...

good thing is that historically these cycles run in a regular pattern so that you can buy these assets when the right time comes.
I guess your crystal ball works a lot better than mine. C'est la vie.
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Old 03-27-2008, 09:27 AM   #9
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I guess your crystal ball works a lot better than mine.
I thought Peg crushed Al Bundy's crystal balls...
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Old 03-27-2008, 09:28 AM   #10
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I thought Peg crushed Al Bundy's crystal balls...
Seeing as his hand was usually protecting them when he sat down, I don't see how...
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 03-27-2008, 11:01 AM   #11
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what is the point in diversifying when some of these asset classes are dead money for years or decades at a time? most decades commodities have negative returns or single digit returns for a decade at a time and not per year.

good thing is that historically these cycles run in a regular pattern so that you can buy these assets when the right time comes. most of use will experience two of these cycles in our lifetimes. we have to remember our lesson this time or read some books on financial history to get a good perspective
Man... that is just delusional.

If it worked, you'd see far more successful active mutual fund managers. Where are they? This has been debunked so many times that the continued belief can only indicate hope over reason.

Lets try a sobering experiment - Since its so darn obvious to everyone but me, what asset class should I invest 100% of my money in for the next month/6 months/year/whatever?
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Old 03-27-2008, 11:36 AM   #12
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Foundation for the Study of Cycles

this place studies cycles in pretty much everything. believe it or not there is a regular cycle of warfare that lasts approximately 20 years from trough to peak. goes back hundreds of years.

people have done studies on commodity prices as well going back hundreds of years and they go up and down on a regular basis
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Old 03-27-2008, 11:39 AM   #13
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people have done studies on commodity prices as well going back hundreds of years and they go up and down on a regular basis
I agree completely.

Now just tell me how I know a cycle is starting/ending in the future and we'll all be rich.

Knowing the past war cycles is of no benefit to predicting when the next one will start. They call this information vs. knowledge. There is no knowledge in that information.
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Old 03-27-2008, 11:56 AM   #14
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commodity cyclecs run every 30 years or so

1907, 1937, 1973 were the three inflationary bear markets. 2003 is 30 years from the last one.

come 2025 start watching commodity prices because we'll be due for another inflationary cycle. or just read up on the history of which years they took place in the past and add whatever number of years to 2008 to get an approximate future start date.
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Old 03-27-2008, 02:26 PM   #15
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So what you are in effect saying is that commodities returns will suck for the next 25 odd years?

I don't see how this is actionable information.
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Old 03-27-2008, 02:44 PM   #16
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I agree completely.

Now just tell me how I know a cycle is starting/ending in the future and we'll all be rich.

Knowing the past war cycles is of no benefit to predicting when the next one will start. They call this information vs. knowledge. There is no knowledge in that information.

I think George Soros would disagree with you, as you should be able to follow the chain of reactions for the cycles he and Jim Rogers seemed to do pretty well with their theory of cycle reflexivity.
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Old 03-27-2008, 03:21 PM   #17
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Yes, and so would Warren Buffet if the topic were choosing value stocks versus investing in an index fund.

Still though, as an individual, non-guru investor - how is any of this actionable information? You both refer to some vague 30 year cycle as though Joe Sixpack could see it coming from a mile away. It just doesn't work like that.

BTW, commodities by themselves look very poor. You shouldn't consider asset classes in isolation though, you should view them by how they work in a portfolio. Since they have low or at times negative correlation to stocks and bonds and are quite volatile, they have the ability to lower volatility while preserving return. Hence, I don't need to worry about what stage of the 30 year cycle or whatever they are in. That is a trader/speculator/market timer view of commodites.
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Old 03-27-2008, 05:33 PM   #18
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So what you are in effect saying is that commodities returns will suck for the next 25 odd years?

I don't see how this is actionable information.
I think you have it wrong, the up cycle just started in about 2003 and should run another 12 years or so. At least that is what Jim Rogers thinks. Am I wrong?

To me it is very actionable if you believe the cycles work, just buy and hold commodity funds, the rally is just getting underway.
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Old 03-27-2008, 05:55 PM   #19
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eh, exactly where does it show that "most of the higher rated managed funds beat that return?"

right in my own portfolio
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Old 03-27-2008, 05:58 PM   #20
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what is the point in diversifying when some of these asset classes are dead money for years or decades at a time? most decades commodities have negative returns or single digit returns for a decade at a time and not per year.

good thing is that historically these cycles run in a regular pattern so that you can buy these assets when the right time comes. most of use will experience two of these cycles in our lifetimes. we have to remember our lesson this time or read some books on financial history to get a good perspective

the answere is so you never have to say im sorry. with economic events, terrorist attacks and financial crises you never know whats next. yes gold was dead for years but once again its an active asset class back on the radar. long term bonds as low as they are still can protect a portfolio against deflation. just watch TLT move 2% in a day as the market tanks.
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