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A Standard, and Poor, Way of Investing.
Old 01-21-2012, 05:32 PM   #1
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A Standard, and Poor, Way of Investing.

Today's WSJ column "Heard On The Street", for those that have followed the S&P closely.

http://online.wsj.com/article/SB1000...976605904.html

Not sure if this is true.
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Old 01-21-2012, 05:38 PM   #2
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It appears that you need to subscribe to the online WSJ to read this article. Perhaps you would like to expand for those of us that are not subscribers.
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Old 01-21-2012, 06:52 PM   #3
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Quote:
Originally Posted by Packman View Post
It appears that you need to subscribe to the online WSJ to read this article. Perhaps you would like to expand for those of us that are not subscribers.
You don't always need to be a subscriber. Here's the super-secret backdoor into the WSJ:
1. Click on the link, and see that the rest of the article is behind the subscriber wall.
2. Highlight the title ("A Standard, and Poor, Way of Investing"), copy.
3. Go to Google.com and paste the entire title into the search box. Quotes are not necessary.
4. The first link that comes up will be the entire article without the subscriber wall.

Quote:
Even with a gain of 4% since the start of the year, the Standard & Poor's 500-stock index has, with dividends reinvested, lost 8% since reaching its peak in October 2007. Adjust the index for inflation, and the news is worse—it has lost 18% since August 2000. Anybody who put money into an S&P 500 index fund between late 1998 and early 2001 remains in the red.
When was the last time that so much time elapsed and the U.S. stock market still remained below its inflation-adjusted peak? Never, according to the monthly price and return data from Yale University economist Robert Shiller's reconstruction of the S&P 500 back to 1871. Even investors who bought on the eve of the 1929 crash were briefly above water, in inflation-adjusted terms, in 1937. Of course, since this owes to the deflation experienced during the Great Depression, strictly speaking the mattress was still a better place to put your money.
But while the stock market has been faring poorly, stocks have been doing better. The equal-weighted S&P 500 index, which puts all stocks on the same footing rather than weighting them by market capitalization, has beaten the regular index hands down. Since August 2000, it has returned an inflation-adjusted 52%.
But again, I'm not sure what we're supposed to do with this information. (Other than applaud the author for making their deadline.) I don't know anybody who invests ONLY in the S&P500. It's like complaining about the Nikkei or the Pakistani cattle-futures index.
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Old 01-21-2012, 07:03 PM   #4
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Ryder equal weighted EFT -symbol RSP

That's where I put my market index money. Be aware though , it has a lot more movement than S&P.
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Old 01-22-2012, 06:55 AM   #5
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RSP looks good. The S&P doesn't look as bad as I thought it would.

The data for RSP started May 2, 2003. Using the adjusted close in Yahoo's historical prices for it, it appears to have given abut a 9.2% total annual return over that time span.

Over the same period, VFINX gave a total return of about 5.8%. If I am interpreting the "adjusted close" properly, that is not really awful. They were both volatile and RSP was more volatile.

Am I reading this right?
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Old 01-22-2012, 08:42 AM   #6
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According to a Morningstar.com growth-of chart, if one invested in Vanguard's VFINX on 8/31/1998 and held to today in a tax-advantaged account and reinvested all dividends, one would have about 75% more money than they started with.

That is certainly not "remains in the red". Doesn't anybody do any fact checking anymore?

If one invested on 3/31/2000 (a near high in the time frame mentioned), then one would be up about 8%.
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