Zero Day

[boont]

March 10th was the market's "Zero Day," where dividend-adjusted returns from the Standard & Poor's 500 Index, the favored long-term benchmark for conservative investors -- registered a negative cumulative return for the decade so far. Put simply, millions of investors have been throwing good money after bad for more than eight years. End of Story.

[JPatrick]

Originally Posted by boont

Put simply, millions of investors have been throwing good money after bad for more than eight years. End of Story.

Unless, of course, the investor in question has ventured beyond the S&P 500.

[LOL!]

OK, but what about folks who invested in January 2003?

[barbarus]

Originally Posted by LOL!

OK, but what about folks who invested in January 2003?

They won't hit zero until the end of the month(week?).

[tomintucson]

I don't understand why this thread has drawn such little attention. My observations of the investing behavior of perhaps the majority of those who post is that it favors the old buy-and-hold, stocks-for-the-long-run mantra. While I also tend to hold my investments for periods of five years or longer, a few caveats are in order. First, the typical small investor continues to hold on average only 10% of their equity allocation in foreign stocks. Also, a truly diversified investment portfolio holds the sorts of asset classes encompassed in, for example, the Harvard and Yale endowment portfolios. These guys are the ultimate in long-term investors. It's an endowment, after all. If you are not familiar with these managers' investment strategy, Google them to learn how they define reality.

If you haven't done so already, please broaden your definition of diversification. The underperformance of US equities has been appalling.

[ziggy29]

Originally Posted by boont

March 10th was the market's "Zero Day," where dividend-adjusted returns from the Standard & Poor's 500 Index, the favored long-term benchmark for conservative investors -- registered a negative cumulative return for the decade so far. Put simply, millions of investors have been throwing good money after bad for more than eight years. End of Story.

Not even close for people who had allocations into small caps, REITs, international stocks and precious metals/materials. Those folks are considerably ahead.

[ziggy29]

Originally Posted by tomintucson

If you haven't done so already, please broaden your definition of diversification. The underperformance of US equities has been appalling.

Large cap US equities, specifically. From 2001 to 2006, US small cap -- particularly small cap value -- did quite well.

[TromboneAl]

chart.jpg

[Gazingus]

You will always be able to arbitrarily select points on a timescale that would have been unfortunate for buying and selling.

[SoonToRetire]

Originally Posted by tomintucson

If you haven't done so already, please broaden your definition of diversification. The underperformance of US equities has been appalling.

True, int'l has outperformed over the last several years. But YTD int'l has had more downside than US:

DJ -7.5&
NASDAQ -16.5%
S&P 500 -12.2%
-----------------
Nikkei -20%
DAX -20%
CAC 40 -18%

Your point is well taken, though, int'l diversification over the last several years would have beaten a US only portfolio.

[Patrick]

Originally Posted by TromboneAl

Attachment 3401

I like the part up til 2000.

[samclem]

Originally Posted by tomintucson

I don't understand why this thread has drawn such little attention.

I guess because:
1) The "Zero Day" scary label is just BS. Who thought of that? What is magic about 1 Jan 2000? Heck, we've been below zero tiem and again.
2) As others (and you) have mentioned, diversified portfolios haven't done as poorly.

So, this thread will be of great interest to those who:
-- Didn't know that diversifying was important
or
-- Thought large cap US stocks could only go up.

I think that's a small group of people on this board.

[CuppaJoe]

Originally Posted by JPatrick

Unless, of course, the investor in question has ventured beyond the S&P 500.

Or, if the investor went into an S&P index with a lump sum in January 2002, DCAed up to mid-August 2007 and out.

[TromboneAl]

I remember the first time I said "Wow, if I'd just put my money under the mattress I'd have more than I have now." I think that was around 1988.

[bpp3]

Originally Posted by boont

March 10th was the market's "Zero Day," where dividend-adjusted returns from the Standard & Poor's 500 Index, the favored long-term benchmark for conservative investors -- registered a negative cumulative return for the decade so far. Put simply, millions of investors have been throwing good money after bad for more than eight years. End of Story.

Spreadsheet sez: time to buy more US stocks.

[ats5g]

Originally Posted by tomintucson

I don't understand why this thread has drawn such little attention. My observations of the investing behavior of perhaps the majority of those who post is that it favors the old buy-and-hold, stocks-for-the-long-run mantra. While I also tend to hold my investments for periods of five years or longer, a few caveats are in order. First, the typical small investor continues to hold on average only 10% of their equity allocation in foreign stocks. Also, a truly diversified investment portfolio holds the sorts of asset classes encompassed in, for example, the Harvard and Yale endowment portfolios. These guys are the ultimate in long-term investors. It's an endowment, after all. If you are not familiar with these managers' investment strategy, Google them to learn how they define reality.

If you haven't done so already, please broaden your definition of diversification. The underperformance of US equities has been appalling.

Eh, you might want to read Swenson's book. He most definitely does not recommend the alternative assets Yale invest in for individual investors [timber, private equity, hegde funds, etc.]. IIRC, his recommended asset classes were:

1) a US TSM index Fund
2) a MSCI EAFE index fund
3) a REIT index fund
4) a TIPS bond fund
5) a IT/LT Treasury bond fund

btw - here's a cool site that'll let you see trailing total returns for mutual funds:

Stockcharts

[tomintucson]

Pardon me, but as we haven't met, you might consider refraining from commenting on what I have or have not read.

I'm citing money managers such as David Swensen and Charles Ellis as examples of really-big-picture kinds of thinkers. Mr. Swensen says, "Don't invest like I do." Warren Buffet says the same. I'm familiar with the refrain, because I use it myself when friends or family ask me for investment ideas. (Of course, the only thing I have in common with these gentleman is the use of the line, "Don't invest like I do.")

I encourage people to do what all successful investors before us have done: find a reasonable, well-thought-out investment strategy that works for you, and stick with it.

[ats5g]

You are hereby pardoned.