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by marincounty
4053 days ago
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"None of these criticisms will come as news to finance professionals, most of whom use far more precise measures — like the S&P 500 or the Wilshire 5,000, which cover more companies more precisely — when making investing decisions." Never understood the Dow. Never understood the importance of a healthy 3-5 percent interest rate until now. I used to make $500/yr. on my cd. I now make $9/year on a .1 percent rate. Have always been too scared to invest in the stock market. There's a small part of me thinking about putting my meager savings on Microsoft--and letting it spin? I've been able to call the huge downturns in the market, but always lost on predicting stock upturns. I feel a downturn now. I am always contrairianly wrong on stock picks--so much so, I think it might be a good strategy? I don't see too many people talking about the money lost by the poor and middle class who rely on cd's? One other thing I noticed is the Indexes seems to go up on Mondays and down on Fridays? (I think the big boys take their risk out for the weekend and put it back on Monday?). I wonder if HF trading will mask the next downturn? In college, I had a finance instructor let slip out something interesting. "Ah--in the end you would be surprised about just how much Insider trading plays a part."
Students, "What?" Teacher, "Um--Um--the SEC regulates that! lets move on."
And then there's that quote in that movie about the psychopath, in the 80's, who pushed penny stocks played by McCanawho, 'Noboby knows when the stock will go up, or down.' (sorry about the ramble) |
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WRT "market timing," the lay investor wins by NOT relying on market timing. Even if you think the market will move in a direction, it's impossibly hard to guess when. Don't believe me? Check out this study which shows that missing single days can adversely impact a 20-year holding.[1] In this study, researchers looked at 20 years worth ('95-'14) of daily returns and asked what'd happen if you missed the best days and/or ate worst days. Missing the top 10 days of gains -- out of 5,036 trading days -- cuts your portfolio value in half. Miss 20 days? Your portfolio doesn't move.
[1]https://www.ifa.com/12steps/step4/missing_the_best_and_worst...