Market crash: are we there yet ?

[camaraderie]

CP...I thought it was invested in BlueCross/Blueshield!! (G)

[cardiacpaul]

I wish! Humana actually...

On other fronts, On Monday, my older brother goes in for a replacement pacemaker/defib.
His is infected after having been installed for less than a year.

He's been told by a former employee that its not surprising considering that the pair of Doctors that were doing them that day had a side bet to see who could finish the dozen that each had scheduled that day. (at $72,000.00 ea)

TheCuban is in Florida and may not be coming back, (personal issues) so, all in all, today sucked.
hows THAT for hijacking a thread, eh?

[bestfriend]

Originally Posted by cardiacpaul

I wish! Humana actually...

On other fronts, On Monday, my older brother goes in for a replacement pacemaker/defib.
His is infected after having been installed for less than a year.

He's been told by a former employee that its not surprising considering that the pair of Doctors that were doing them that day had a side bet to see who could finish the dozen that each had scheduled that day. (at $72,000.00 ea)

TheCuban is in Florida and may not be coming back, (personal issues) so, all in all, today sucked.
hows THAT for hijacking a thread, eh?

Sorry to hear that CP. Go get a shovel and dig up that can, buy yourself something to feel better.

This has been a heck of a ride fellas. All in all, I have to go with my gut instincts, hasn't failed me yet.

[sailaway21]

Steve makes some good points. I would answer Chris' concerns by saying that you cannot ignore inflation. If your money is under the mattress, inflation is eating away at it as sure as a mouse will. For those who might be confused, I believe the posters above who refer to having their money in cash are not literally talking of cash under the mattress. They are referring to the fact that they can put the cash in the money markets versus the stock market. There are times, when interest rates are high or cash is tight, that money markets return more than stocks.

The truly startling thing is that so many view the market as some crap shoot or game of chance. There is an element of luck in it, but no more than the luick it takes to safely get you to work in the morning. Some of the best advise I've received was to invest in what you know. For instance, if you work for a heavy equipment manufacturer and you know that your company is involved in the bidding for a truly large overseas order for heavy equipment it would make perfect sense to invest in some of those companies involved. You're probably ahead of the curve of the insitutional investors.

Investing isn't a crap shoot. It is buying a piece of a company that you think is going to do even better than it is now, and you want to own a piece of it. You own the company, perhaps only a minority share, but ownership nevertheless. Bill Gates is where he is because other people, who don't know much at all about computers but figured he did, bought into what they thought would be a desirable, and therefore successsful, product.

The facts are; most people buy in at the top of the market, or individual company, and sell somewhere well on the way down. How to avoid this? Orient your buying towards long term growth and repress the desire for get rich quick schemes. Take a flyer on a some small cap start ups, but do not base your entire portfolio around them. The tortoise wins this race also.

[chris_gee]

Actually "Accordingly, year-to-date (through June 22) (2007), investors in the 3.875% TIPS bond have realized a negative total return of about 2.0%" Less if inflation is understated.
Actually the figures for investing 2% of income in stocks over 40 years ages 22-62 have been done see http://www.brookings.edu/views/testi...s/19990511.htm. So the 8% suggested can be calculated.
The average real rate of return with reinvestment assuming, S&P, no fees, official inflation, and apparently no taxes was 6.4%. But for retirement dates between 1910 and 1997 the average return over the previous 40 years to retirement date varied from 2% to 9%.
Take the market as a whole not the S&P, take off fees taxes
and even assuming the CPI is not understated the real return is probably close to 4%. But as well as long up periods the market has long down periods. Your return at the start of retirement, and during it would depend a great deal on where you were in the cycle.
This effect produces annuities ranging from 10%- 40% of peak earnings (for 2% saved) with an average of 20.7%. A decent downturn and higher inflation would hit near retirees hard.
Probably in retirement or close to it one would opt out of stocks because you couldn't withstand heavy losses. However you then depend on bond yields being realistic.
I agree with Sailaway. I originally responded to the idea that one could expect 10% market returns.

[bestfriend]

This graph says a lot. Taken from Chris' link.
Anyone have an up to date one?

[sailaway21]

This site might provide some illumination. Note that they report an annualized return of 11% for the historical market. Since the S&P is up about 8000% since 1950, the Dow slightly less, I see no reason for long term pessimism. I have no interest in the site below, but it seems to have some level headed information.
http://www.fool.com/mutualfunds/choosing/choosing01.htm

[sailaway21]

And, the aforementioned Larry Kudlow, on the "crisis".
http://article.nationalreview.com/?q...QyZjYyMDFmY2Q=

[chris_gee]

Ok I looked at Kudlow. Much of what he says seems reasonable. However if wages are growing at 5.2% pa with unemployment so mild (due to the birth death adjustment being overstated at such times) then look to interest rate rises to quell such inflated gains when inflation is so low. What happens to the profits and market then? Or if they are lowered what happens to the $? Oh what the heck print more money.

[Rickm505]

I read that Kudlow article and think that the author has missed his calling. He should be writing for Disney.

Just about every CNBC and Bloomberg talking head has done a program on how the unemployment numbers are being manipulated, as Chris mentioned in his post. Yet Kudlow makes the current numbers Gospel. He then very carefully cited an hourly wage increase, without mentioning that weekly paychecks are decreasing. This is deliberately misleading.

This was supposed to be a "don't worry, everything is going to be OK" story.

Sailaway21, I think you might look just a little deeper into the available information.