Comments on: My spectacles are still cracked!

By: Steve

Steve — Thu, 26 Mar 2009 04:20:21 +0000

I’d like to comment on Rick Francis’s statement above.
It appears he is having a bit of bad luck in his investing in stocks. I feel This could very well be due to lack of fundamental knowledge in how to rate stocks , or how to locate those top stocks,which would help his portfolio.
I assert ,he needs to study further, learn more and be better equipped before making those purchases.Perhaps a course in accounting will help him better evaluate the stocks which he is interested in.Perhaps , he needs to further research the leaders of each company(so he’ll better understand these leaders) .Great Companies are always run by Great leaders with vision of where this company is and should be headed.Honest leaders
If your constantly losing money in the stock market, then its time to re-evaluate your skills for picking those stocks.Take a bit of time,paper trade, and keep real tight notes as to what you bought, what price you bought at, why you bought , and watch these paper purchases,till you understand where your weaknesses lie.Its less costly this way.

By: Adrian

Adrian — Mon, 23 Feb 2009 03:40:36 +0000

@ Jeff – Thanks. I’ll go with the last 75 years (a period that INCLUDES the Great Depression) and sleep quite soundly …

By: Jeff

Jeff — Mon, 23 Feb 2009 03:37:14 +0000

@Adrian,

No one is arguing that during Grandgaard’s study period (1929-2000) the market returned less than 8% (compounded).

Grandgaard study, however, does not support your statement that “there has NEVER been a 30 year period (incl. purchasing the day before any of the previous crashes) where the market has returned less than 8% compounded.” NEVER is a long time, certainly longer than the period discussed in the Grandgaard study.

Schiller’s data (1871-2009) extends beyond Grandgaard’s data range…and shows there are multiple 30-year periods (outside of Grandgaard’s study period) that have returned less than 8% (compounded).

By: Adrian

Adrian — Mon, 23 Feb 2009 02:52:09 +0000

@ Jeff – And, what I’m pointing out is that based upon the last 75 years of the same data (reported in 2 books by a well-respected financial ‘expert’) that the market has NOT returned less than 8%.

Clearly, somebody is provided incorrect data here …

By: Jeff

Jeff — Mon, 23 Feb 2009 02:19:09 +0000

@Adrian,

My guess is that Grangaard’s reporting of historical market returns is the same as/similar to Dr. Shiller’s.

What was intending to point out was that there have been multiple 30 year periods where the market has returned less than 8% (compounded).

By: Adrian

Adrian — Mon, 23 Feb 2009 01:03:49 +0000

@ Jeff – Grangaard looked at the last 75 years … what have you found in that range?

By: Jeff

Jeff — Sun, 22 Feb 2009 23:59:59 +0000

“I’m sure that the tool looks useful, but how can you be sure of the veracity of the data?”

The author used stock market data from “Irrational Exuberance,” (Princeton University Press, 2000, 2005) by Dr. Shiller. Since Dr. Shiller is a colleague of Professor Ibbotson’s at Yale University, my guess is that the raw data is accurate. After looking at the excel spreadsheet I downloaded off of Dr. Shiller’s website at Yale, it appears that political calculations accurately presented Shiller’s raw historical data. You can download it and run the figures yourself (http://www.econ.yale.edu/~shiller/data/ie_data.xls). I would recommend that you look particularly at the time period 6/1902-6/1932.

By: Adrian

Adrian — Sun, 22 Feb 2009 21:20:23 +0000

@ Jeff – Thanks. I’m sure that the tool looks useful, but how can you be sure of the veracity of the data?

However, for one of my posts on stock market returns [ http://7million7years.com/2008/07/12/define-long-term/ ] I said:

“Here’s where I like the research that Paul Grangaard did for his excellent book, The Grangaard Strategy … using the research done by Ibbotson Associates (published annually in their authoritative ‘Stocks, Bonds, Bills, and Inflation® Valuation Edition Yearbook’), Grangaard found that over the 75 year period between 1926 and 2000, large cap stocks averaged and annual return of 11% (small cap stocks did a little better at 12.4%), but he also found … the best thirty-year holding period delivered a 13.7% average annual rate of return between 1970 and 1999, while the worst thirty-year period delivered an average annual rate of 8.5% between 1929 and 1958.”

Ibbotson is regarded as THE authority on historical stock market returns … I stand by my comments.

By: Jeff

Jeff — Sun, 22 Feb 2009 17:03:23 +0000

“The facts are the facts: there has NEVER been a 30 year period (incl. purchasing the day before any of the previous crashes) where the market has returned less than 8% compounded.”

This is untrue…take a look here and you’ll find many 30 year periods that returned less that 8% compounded (with dividend reinvest) http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html

By: Adrian

Adrian — Fri, 20 Feb 2009 22:23:53 +0000

@ Rick – Now you’re talking “if’s”

The facts are the facts: there has NEVER been a 30 year period (incl. purchasing the day before any of the previous crashes) where the market has returned less than 8% compounded. So, if your Number can be reached by an 8% return and you are happy to wait 30 years, don’t sweat it … dump 100% into a low-cost Index Fund and wait.

On the other hand, if your Number/Date can be reached by rebalancing, go for it I say! I think it will give you a lesser return, long-term, which is the only time period that I am interested here.

Josh’s Number is far more – and, his Date far sooner – than can be achieved with a traditional approach to stocks – with/without rebalancing.

So, if he IS serious about getting there, then he simply HAS to become an expert in something: business, stock trading, property development … and, mitigate the attendant risks as best he can.

Alternatively, he can simply let go of his dreams …