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Unormal posted:There are ALWAYS more ups and downs coming soon, that's the risk portion of equity investment. If you're not interested in volatile investments, consider bonds. And not the volatile bonds, either.
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Jun 16, 2009 01:46
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Captain von Trapp posted:Quick question: how did corporate bond funds do in the high-inflation period of the 70s? I'm a little worried about stagflation and am looking into bonds as a lower-risk way to keep up with (and hopefully do a little better than) inflation even if stocks decide to tank again. Rising inflation kills most bonds. TIPS pay a fixed percentage above the CPI, so you might start with those.
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Jul 11, 2009 09:18
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As recent events show, there are very few well protected stocks that produce that kind of return either.
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Aug 11, 2009 08:44
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quadreb posted:That's why I go for much higher returns on very risky ventures. The bonus of getting to hear a full business proposal and have the business plan laid out for you when you're a member of a group serving as the principal investor in a project beats the hell out of mutual funds if you can pick the right projects. Like recently, I helped fund exploratory oil drilling in Texas on a 2 year contract and make 120% returns on my investment. However, I've also funded similar projects that lost everything. Losing everything is hardly a fitting foundation for long term investment. Enough of those and you never will be within 10 years of retirement.
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Aug 11, 2009 22:52
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barking frog posted:I don't understand where people pull this magical 8% return figure from. The current 10 year aggregate return on the S&P 500 right now is -23%. In fact, the last time the 10 year return was 8% pa (216% aggregate return) was in H1 2001. That's not including dividends, but it's not indexed for inflation either which roughly cancels that out in real terms. And this is before taxes. A return in the area of 9-11% is what you get annualizing over multiple decades. And not counting dividends makes no sense.
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Nov 30, 2009 06:02
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barking frog posted:I said in real terms. If you get 2% dividends in a given year but inflation is 2%, are you actually any better off? Depends on whether the assets inside the corporation have also appreciated due to inflation. Since there's no easy way to track that, most people stick with 9-11% nominal terms.
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Nov 30, 2009 08:11
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shredswithpiks posted:You buy the property and it's value grows like any other investment. Despite real estate and financial investments both having collapsed at the same time recently, I do not believe that real estate increases in value the way stocks do. Real estate price appreciation seems to me much more dependent on speculation than stock price appreciation.
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Jan 5, 2010 20:02
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80k posted:If you know how to analyze stocks, great. But it is not a prerequisite. Note that I usually do not defend active funds, and still heavily recommend indexing. Ironically, most active funds do as well. Apart from a few concentrated positions they throw in to justify their fees, nearly all large active funds do engage in what is effectively indexing in order to not significantly lag the market for too many quarters, or their investors will abandon them.
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Feb 25, 2010 02:58
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There is no gift tax for gifts to spouses, but California is a community property state so, good news, half the money is hers already. I believe that if you're married and file jointly, each spouse can deposit the maximum contribution in his or her own IRA as long as you jointly have the earned income to cover it.
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Apr 1, 2010 19:08
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80k posted:being exposed to dumbass kids' risks affects drawdown of parents' assets (with positive correlation to stock market risk.. i.e. Dow crashes, expect a call from kids), and hence affects their ability and willingness to take risk with their money which affects your inheritance. Surely that assumes that the parental support market is efficient.
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Apr 5, 2010 05:08
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80k posted:On the other hand, deep value investors tend to focus more on free cash flow, some of whom have an absolute revulsion to EBITDA (Buffett and Munger and maybe to a lesser extent Seth Klarman). However, FCF analysis is labor intensive if you want to arrive at anything useful. Historical simplified Cash Flow from Operations minus Capex tells you little, though it tends to err on the side of conservatism so it may help you pick out the more obvious values. I have generally found that reported earnings plus depreciation and amortization minus capital expenditures is a reasonable proxy for free cash flow, although most of the thing I've purchased have a working capital that is small relative to fixed capital (changes in working capital are usually the difference between reported earnings plus depreciation and amortization and cash flow from operations). However, I have also noticed that many companies have current capital investments that fall below historical averages, which is one concern, but the bigger concern is what proportion of capital expenditures goes to maintaining the current earnings power and what proportion goes to expansionary plans. But assuming that all capital investments are necessary to sustain current earnings is the conservative approach, and if you can find good "obvious" investments there's probably no reason to look for more subtle ones. But it's impossible to know what's going to happen over the next 20-30 years. Value investing works because the future very often resembles the recent past, but you do need to keep updating your views. Join us at the stock picking thread. Do not be afraid.
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Dec 14, 2010 23:28
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Chin Strap posted:In the long run (going by history only) value stocks have outperformed growth at the cost of increased volatility. Pretty standard risk reward tradeoff. Except that according to SG Equity Research, between 1950 and 2007 value had higher returns and slightly lower volatility than growth.
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Jan 7, 2011 05:04
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poofactory posted:It's not too late to get in now. I think we have another 10% to the upside by the end of the year. Okay, which Middle Eastern country will have a revolution next?
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Feb 24, 2011 20:00
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poofactory posted:Why is are you limiting your focus to the middle east? There's going to be a lot more of this going on over the next several years. Because if not for an accident in the Middle East, your portfolio would probably be diminished by a full 10% compared to where it is now. Most other places are net consumers of oil.
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Feb 24, 2011 22:38
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Yes, since last June. But this is the long-term thread. You guessed a trend in commodity prices correctly once, but should we rely on you continuing to guess correctly for the next 30-40 years? Come to the stock picking thread, where we can tell excellent stories about confirmation bias and the benefit of hindsight.
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Feb 24, 2011 22:53
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Frohike999 posted:Does anyone here have opinions about market-linked investments? We recently switched to Merrill Lynch at work, and the advisors brought it up as one possibility to keep my expense ratio lower. My understanding of it is that you buy X units of it and hold it for 2-5 years depending on which one you buy. At maturity, if the index it was following goes up, say 6%, you get a 3:1 return on that, so principle plus 18%. There's usually an upside cap, so if the cap were 60% and the markets went up 30%, you would get principle plus 60%. There is also a downside limit, so if the markets went down, you would get back no less than 90% of the principle at maturity. I'm not sure how it keeps your expense ratio lower, as I think the additions of derivatives to a financial structure makes it more expensive, not less. I'm not sure how much you know about derivatives, but it seems to me that limiting your downside while multiplying your upside (presumably through the judicious use of options) requires you to pay money to the person who is taking the downside risk and sacrificing their upside for your sake. That money most definitely comes out of your pocket one way or another, even if the fund doesn't describe it as an "expense." In order for you to "win" with this investment, not only would the index have to go up, but it would have to go up far enough that you make back all of the money you're spending on these options, within the maturity of the deal. I'm not sure what your take is on the future course of the indexes (hint: the general view is that no one can predict them accurately), but if you want something you can buy and forget for a long period, pick something else. And as a general rule, whenever you by something more complicated than a Treasury bond or an index fund, someone on Wall Street is laughing at you. Also, Merrill Lynch is the firm that bankrupted Orange County.
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Mar 24, 2011 02:47
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Uranium 235 posted:Can anyone inform me about this Shadowstats website that claims the real inflation rate is absurdly high? On some other forums, I see their graphs thrown around like they are stone cold fact, and people don't even question it. I don't know that much about economics so I lack the background to debunk this myself, so I thought I'd ask in here to get a better feel for it. My instincts tell me this is wrong because I haven't seen prices change drastically enough for me to believe that inflation is 10% and has been for years. I said this in the debate and discussion thread, but it might go over better here. The shadowstats figures overstate things by several percentage points a year, and the effect is particularly pronounced over long periods. David Clayton, blogger posted:BLS says inflation over the last 20 years has been 73%. ShadowStats claims prices have increased 379%. John Williams apparently believes the price level is almost 5 times higher today than in 1990.
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Jan 2, 2012 04:09
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