What you say about blue chips and the stock market as a whole is absolutely true. Real estate values have also gone up tremendously over the past 25 years. 25 years ago the 87,000 dollar house I live in sold for 21,500 brand new.
The only problem is that individual stocks and invdividual blue chips do not always perform that way. Just a guess, but I bet at least 30% of the stocks that were around 25 years ago are now completely out of business.
I agree totally. One caveat, you need to predict which way the market is going to move (up or down) before you buy or sell. Most speculaters buy right before it crashes or sell right before it leaps.
No one here has suggested that a person pick a single stock and invest into it. Most of us are not stock market experts and can’t pick stocks as well as someone who follows the market everyday could.
There are many mutual funds out there that can provide you their performance for the past 1, 5, 10 and 20 years. I can assure you there are no shortages of portfolios out there that exceeded 7 percent return in the past 20 years.
That’s not counting all the REIT’s (Real Estate Investment Trusts) out there that produce an excellent cash-on-cash return and good 20-year performance figures. Although, an REIT will never outperform a private syndicated effort because of all the federally mandated reporting which adds significantly to their legal and accounting bills.
That’s the catch: You CANNOT predict where the market is going and if you try you will LOSE way more than you will win.
Let’s not confuse REI and playing the stock market. The only strategy that wins on Wall Street (and has been winning since the beginning) is to buy and HOLD quality companies for the long haul. Near term fluctuations mean nothing when your outlook is 20 years.
That is what I figured. Widespread diversification. I know many people who own mutual funds. Over the long haul 7% is below average. But if you take a year like 1998, 7% is lucky. I know many people who didn’t even beat inflation with their mutual funds last year.
Also, read the Cash Flow Quadrant. Robert Kiyosaki gives an interesting argument about mutual funds and the middle class.
I won’t put down mutual funds too much because I have some accounts myself, but I will admit that they are the slooooooooow road to riches.
Absolutely Not. You can make wonderful gains of 10-30% a month in the market. It just takes cash to play. I started playing the market at first when investing. It was great. But, I love doing RE, Mh Deals and creating paper, plus you can create enormous(infinite) yields with little or no money. But, you can bet when my cash flow is built up, back to the market I will go, to make some great capital gains.
Intel has averaged 33.8% return over the last ten years. That means that if in 1987 someone invested 1000.00 that investment would be worth 15,000.00. If someone mixed in some clever options trading using RE to raise the $$ you could make some huge gains… If you take the time to learn it, stocks will offer you 0 liability - no lawyers, no chasing after scams… The only catch is that you have to have a lot of cash to jump on opportunities… Personally, my day job pays the bills so I’m sticking 1/2 of my RE gains into a good mutual fund (22.5% return) and the other half into low risk stocks Intel, DELL…
If I had any more than 2000.00 in a bank account I would feel as if I was robbed… So, I do what the bank would do with my money and make 20-30% insted of 4%…
Well, I don’t agree with any market strategy that says you must predict where the market is headed and then jump in and out. That’s not sound financial strategy and will end up breaking most people. It assumes you can market time and see the future - both of which I consider impossible.
I certainly won’t disagree that there are not ways to make an 18% yield on investment. I own mutual funds, tax certificate liens, and rental properties that yield that much and more.
I do however, realize that most debt at its root carries some risk. Who has the most risk, a person who own a $200,000 building free and clear or a person who owns a $1,000,000 building with an $800,000 mortgage. The both have the same equity. In good times, the million dollar building probably has a much higher cash flow than the 200K building. But in bad times, the million dollar building may be half vacant and the owner ends up getting foreclosed or going bankrupt while the 200K building may be half vacant and the owner just ends up breaking even.
In spite of all the debate, which I enjoy, I do give you credit Sean for creating the longest thread I have ever seen on this board.
I don’t disagree that people can’t make large returns in the stock market or mutual funds. I happen to have a decent size mutual fund myself.
It is easy to look back and say Intel has done 33.8% over the last 10 years. However, 10 years ago it was 1989 and could anyone have predicted that pentium processors would be so great or that the internet would be anything like it is today. How many people even heard of Intel in 1989. Back then it was considered gambling. Today it is a blue chip. Who knows if they will even be around in 2009? I suspect they will but life is full of uncertainties. I bet there were lots of investors is January 1929 who thought the stock market would be going through the roof for another 10 years too.