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Subject:  Re: What be them day traders up to? Date:  1/26/2008  8:01 AM
Author:  AcmeFool Number:  22848 of 37007

Defeatist attitude! The NAV's go up and down. Common stock NAV goes up and goes down, but with good companies, one winds up with large growth in NAV.

This analogy fails miserably when correctly analyzed.

Common stock NAV goes up and down based on corporate fundamentals. Over the long-term, however, they have always gone up because of economic growth. Unless you think there will no longer be long-term economic growth, you have to believe common stock NAV will continue to rise over time.

Bonds work differently. NAV *only* rises due to decreases in the market interest rate; the *only* fall due to increases in the market interest rate. Since current rates are dramatically lower than historical averages, it is only logical to believe the long-term direction of rates will be up. Therefore, logic dictates that you will have a long-term capital loss on any bond fund purchases made at current rates.

Monthly 'tax-free' checks are very nice to receive!!

I'm sure they are. But the fact that the check is tax free does not mean the investment was the best use of money.

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