UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next
Author: charliebonds Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35367  
Subject: Re: Investing for Dividends? Date: 9/4/2011 1:33 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Dave,

I've done a similar comparison in this forum as his of the returns from stocks vs bonds from that same March 2009 bottom, and bonds were competitive with stocks on an absolute basis. On a risk-adjusted basis, bonds beat the crap out of stocks, of course. So, not withstanding the immense respect I have for Jim and his work, back-tested results can't be spent at the grocery store. Sometime, when you're truly bored, Google "investor under-performance."

How is that the Standard & Poor’s 500 index can turn in a return of 11.80% for the period 1987-2006 and yet individual stock mutual fund investors earned a dismal 4.30%? This is not an anomaly. Historical data indicates that individual investors consistently and significantly underperform the returns of the overall market.

Assume the study on which that result was based was methodological sound. Then apply the same ratio of under-performance to a benchmark such as Lehman's Aggregate Bond Index. (or whatever it has been re-named to). Stocks or bonds or whatever, it doesn't matter what the retrospective studies suggest was available to investors. The vast majority, like 95% of them, are unable to achieve even a reasonable fraction of it. Always, my point in this forum has been this:

"Very decent bonds can be made from bonds. Much better money can be made from other things. So, pick your game, and stop indulging in woulda/coulda/shoulda."

Charlie
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Value Hounds

Clorox Isn't Cleaning Up
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement