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Thread: looking ahead 25 years... investing

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    Veteran Member XxAmber89xX's Avatar
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    Default looking ahead 25 years... investing

    from my father's (CFP & CA) newsletter:

    Index Growth for popular indexes around the globe...
    (statistics from the US Census Bureau-which is collected from other worldly census collectors) compiled by Altavista Research... December 2007.

    1. S&P 500 with 23% growth
    2. MSCI Canada with 20% growth
    3. MSCI Brazil with 18% growth
    4. MSCI Emerging Markets with 16% growth
    5. MSCI Pacific Rim Ex. Japan with 15% growth
    6. FTSE/Xinhua China 25 with 10% growth
    7. S&P Euro 350 with a 3% growth
    8. MSCI Japan with about a -10% deflation.

    alot has to do with changing demographics. though, demographics are not necessarily destiny.
    India's population is expected to grow by 39% by the year 2032
    some of the China hype might be displaced, because the country will grow old 'demographically' before it grows rich...
    Canada is expected to grow 18% in population in next 25 years. it will be a nation of ederly pensioners, though. however, our market is constructed to profit from an aging population.

    the report concludes to say that people, primarily index and ETF investors, should avoid Japan investments, continue to buy in the US and Canada, with limited exposure in India and South America.
    Oh Canada, we stand on cars and freeze...

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    Veteran Member XxAmber89xX's Avatar
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    Default Re: looking ahead 25 years... investing

    now i don't necessarily think this is a perfect forecaster of things to come... a high of around 25% growth is 1% per year??? that's horribly slow growth... i am sure some will out perform and others underperform.

    regardless, the volatility in the market right now is presenting trading opportunities for ETF investors. it is actually very easy to buy low, sell high right now on the day to day fluctuations.
    Oh Canada, we stand on cars and freeze...

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    Banned Melonie's Avatar
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    Default Re: looking ahead 25 years... investing

    ^^^ this is why I hate indexes ... because by definition they water down the excellent performance of certain index companies with the poor performance of other index companies.

    Also a huge factor that this study appears to have overlooked is that an ever-increasing number of baby boomer retirees will be forced to sell their 401k / IRA stocks after retirement. Just as the 'invention' of 401k's caused one-sided buying of stocks in the 1990's, the large number of new retirees will cause one-sided selling of stocks in the 2010's.

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    Default Re: looking ahead 25 years... investing

    ^^^ and that's a reason why I am trying to learn how to 'safely' short stocks. I have never done it before, but I thought it's something any self-directed investor needs to be familiar with going forward.
    Oh Canada, we stand on cars and freeze...

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    Default Re: looking ahead 25 years... investing

    Quote Originally Posted by Melonie View Post
    ^^^ this is why I hate indexes ... because by definition they water down the excellent performance of certain index companies with the poor performance of other index companies.

    Also a huge factor that this study appears to have overlooked is that an ever-increasing number of baby boomer retirees will be forced to sell their 401k / IRA stocks after retirement. Just as the 'invention' of 401k's caused one-sided buying of stocks in the 1990's, the large number of new retirees will cause one-sided selling of stocks in the 2010's.
    Investing Basics 101

    95% of the money managers don't beat Index.
    Many Hedge Funds don't beat Index
    Private Equity Returns are reverting to mean.

    Indexing is the best return for your money on the risk you take and the fees paid. This is proved by research.

    Just to give an example:

    Melonie on Nov 28th, with her infinite wisdom and knowledge asked small time investors to invest in RYWBX trading at $32, a mutual fund that bets on the falling dollar and gives you 2x returns.

    http://www.stripperweb.com/forum/sho...d.php?t=103511

    Melonie who follows global-macro-political-credit events was 100% sure due to Feds impending rate cut and pumping money into the economy the dollar will continue to fall. You can use this 100% sure bet and make boatloads of money or at least hedge it so that when you fill gas next time you are protected.

    Well if you had taken her advice and invested your hard-earned dollars on it, you'd have lost 20% of your investment, RYWBX is trading at $26. The worst part about this investment is you pay an additional 1.65% on fees and you are holding a worthless piece of asset which is pure speculation. On the other hand if you buy S&P500 you own part of companies.

    http://finance.google.com/finance?ch...X&q=MUTF:RYWBX

    But, more importantly, her understanding of 401(k) is plain wrong. When baby boomers sell their 401(k)s they are selling assets just like they sell their homes in New York to retire in Florida. That doesn't mean New York Real estates are worthless, it just changed hands.

    Investing in 401(k) is not a Zero Sum Game.

    It is a Zero Sum Game around the mean returns of 12%. This is the fundamental concept Melonie still hasn't understood. i.e Some investers will make 10% and others 14%. Even if by bad luck if you make 10%, that is much better returns than Investing long term in Gold/Currencies

    So repeat after me
    Index Investing is a Zero Sum game around the mean returns of 12%
    Index Investing is a Zero Sum game around the mean returns of 12%
    Index Investing is a Zero Sum game around the mean returns of 12%
    .
    .
    .
    .
    .

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    Default Re: looking ahead 25 years... investing

    index investing has worked for me so far.

    I invested in EWW (Mexico Index) in 2003 at $15.15 and it now is at $59. i've wanted to add more to this index now that i am making some $$, but i'll wait for it to go 'on sale'... my portfolio weighting in this ETF is small... i only had $500 to invest in it 4 years ago.

    I just purchased the HYG Corporate Index Bond ETF in August at $96.01 and bought more just a few weeks ago at $97.01... it is the kind of etf that you buy on bad news... ie, the credit crisis makes it a very volatile stock... if you can get it at a 5% discount, more $ to invest, right? the divedends will occur each month (currently around 62-68 cents per share) it is a liquid way to invest in bonds that i am quite happy in holding for the next 20+ years and adding to on bad news.
    Oh Canada, we stand on cars and freeze...

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    Featured Member Wwanderer's Avatar
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    Default Re: looking ahead 25 years... investing

    Quote Originally Posted by xanfiles1 View Post
    Melonie on Nov 28th, with her infinite wisdom and knowledge asked small time investors to invest in RYWBX trading at $32, a mutual fund that bets on the falling dollar and gives you 2x returns.

    http://www.stripperweb.com/forum/sho...d.php?t=103511

    Melonie who follows global-macro-political-credit events was 100% sure due to Feds impending rate cut and pumping money into the economy the dollar will continue to fall. You can use this 100% sure bet and make boatloads of money or at least hedge it so that when you fill gas next time you are protected.

    Well if you had taken her advice and invested your hard-earned dollars on it, you'd have lost 20% of your investment, RYWBX is trading at $26.
    For all I know, you are cherry picking one of the few times Mel was wrong, which would be quite unfair...or maybe you aren't. But, in any case, I definitely agree with the implied methodology: Before investing on anyone's advice, no matter how financially sophisticated and expert they claim or appear to be, you should look closely at their track record and ask exactly the question you raise here. Namely, how would I have done if I had taken their advice in the past? In the Dollar Den this is particularly easy to do. The archive search function will let you go back a year or three or whatever and sample Mel's, or whoever's, posts back then to see how accurate they turned out to be. Of course, for this to be meaningful, you have to look at a fair number of posts, predictions, bits of investing advice etc before drawing a conclusion. Every financial guru is wrong sometimes and most are also right sometimes.

    On a perhaps slightly deeper level, if I were in the habit of handing out financial advice (which I am not), especially free financial advice, I'd think it only intellectually honest to evaluate myself in the same way. And, if my past advice had turned out poorly, I'd stop playing the role of advisor...or at the very least, I'd warn people about how often I'd been wrong in the past.

    -Ww
    "At this moment what more need we seek?
    As the Truth eternally reveals itself,
    This very place is the Lotus Land of Purity,
    This very body is the Body of the Buddha."
    - Zazen Wasan

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    Default Re: looking ahead 25 years... investing

    Quote Originally Posted by Wwanderer View Post
    On a perhaps slightly deeper level, if I were in the habit of handing out financial advice (which I am not), especially free financial advice, I'd think it only intellectually honest to evaluate myself in the same way. And, if my past advice had turned out poorly, I'd stop playing the role of advisor...or at the very least, I'd warn people about how often I'd been wrong in the past.

    -Ww
    My advice may be wrong, but at least its not free!! Teeheehee.....

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
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    Default Re: looking ahead 25 years... investing

    Quote Originally Posted by Katrine View Post
    My advice may be wrong, but at least its not free!! Teeheehee.....
    And free stuff is worth exactly what you pay for it all too often.

    -Ww
    "At this moment what more need we seek?
    As the Truth eternally reveals itself,
    This very place is the Lotus Land of Purity,
    This very body is the Body of the Buddha."
    - Zazen Wasan

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    Default Re: looking ahead 25 years... investing

    just a note to one aspect of investing for yourself and considering hired help...

    I do know that my dad doesn't invest nearly as aggressive for his clients as he does for himself. my dad has a 10 year average of over a 20% rate of return. mine is slightly higher at 28.4% but, i've only been doing it a few years, and it is highly concentrated... definitely not diversified... but, i am getting there... and overall i am negative for the year 2007. i am hoping to average better than 12% aror... which i can feel is a worthwhile investment in my time.

    my dad said most of his clients are fairly conservative and don't want to make frequent changes to their portfolios... he's a big fan of ETF's for them along with sensible stocks with turnaround potentials when the opportunities present themselves. right now, he is recommending high cash only portfolios... his own portfolio is at 30% of the weighting he normally holds in stocks! as according to his newsletter.

    if i didn't have an interest in self directed investing and never had a headstart in knowledge that my dad shared with me, i'd be 100% sure that i would go with hired help from a fee for service based CFP.

    funny thing is, i can't share too much with my dad because he doesn't know what i do for $$ now... nor does he know how much i am willing to save.
    Oh Canada, we stand on cars and freeze...

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    Default Re: looking ahead 25 years... investing

    ^^^ admittedly true re the US dollar. Further proof of the old investing adage 'the market can remain irrational longer than you can remain solvent' ! I am truly amazed how much a determined effort by central bank printing presses can accomplish ... albeit for the short term. Also, while this wasn't widely publicized in mainstream financial media, yesterday's co-ordinated effort on the part of most of the world's central banks to support the US dollar has only one precedent ... this occurred once before in the immediate aftermath of the 9/11 attacks. This makes me even more wary that the current situation is starting to reach 'crisis' proportions, even though mainstream financial media is downplaying this.

    PS despite all of the world central bank pumping, and despite all of the Oil Sheik billions, Citi shares are still below $35 Xan ! But then again I should probably take your Citi shares advice and double down on my 'loser' US dollar hedges.

    PS you still don't get what I was trying to say about the zero-sum game. Net of worldwide growth, stock values ARE a global zero sum game. Boeing's gain is Airbus' loss. Toyota's gain is Ford's loss.
    Last edited by Melonie; 12-13-2007 at 05:29 AM.

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