Until recently, being a mega-cap stock — and investing in one — was the best way to get
returns out of this stock market.
Not exact matches
Still, even if you take
out the Obama Trauma, in which the
stock market fell nearly 13 % following the current president's election in 2008 — and, to be fair, the country was in the middle
of a financial panic — the average
return in a month following the election is 0.4 %.
After tracking cash flow in and
out of mutual funds to measure investor sentiment, the research found that in response to hype, general
market enthusiasm or a mass exodus, «retail investors direct their money to funds which invest in
stocks that have low future
returns.
Part
of Madoff's appeal was that he offered investors double - digit
returns year in and year
out and — until the
stock market collapsed — let his investors take
out money anytime they wanted.
Those
returns were incredibly volatile — a
stock might be down 30 % one year and up 50 % the next — but the power
of owning a well - diversified portfolio
of incredible businesses that churn
out real profit, firms such as Coca - Cola, Walt Disney, Procter & Gamble, and Johnson & Johnson, has rewarded owners far more lucratively than bonds, real estate, cash equivalents, certificates
of deposit and money
markets, gold and gold coins, silver, art, or most other asset classes.
That's twice the average 74 %
return for those who moved
out of stocks and into cash during the fourth quarter
of 2008 or first quarter
of 2009.3 More than 25 %
of the investors who sold
out of stocks during that downturn never got back into the
market — missing
out on all
of the recovery and gains
of the following years.
I could achieve that in a mere couple
of years if I were to save excessively and dump my savings (and inheritance) into a Mortgage REIT via the
stock market, most
of which are shelling
out above 10 %
returns in dividend payments.
Warren Buffet has never paid
out a cash dividend in his history as CEO
of Berkshire Hathaway, one
of the best -
returning investments ever in the
stock market.
And yet if you'd invested $ 10,000 in Southwest Airlines on Dec. 31, 1972 (when it was just a tiny little outfit with three airplanes, barely reaching breakeven and besieged by larger airlines
out to kill the fledgling), your $ 10,000 would have grown to nearly $ 12 million by the end
of 2002, a
return 63 times better than the general
stock market.
There are obvious reasons the industry has had less - than - desirable
returns, including: massive over-funding
of the sector, huge increases in inexperienced venture capitalists that took a decade to peter
out, and the massive correction in the value
of the public
stock markets that closed many exit opportunities for half a decade.
As indeed they should — due to the bear
markets of 2000 and 2008 that wiped
out most
of the excesses
of the late 1990s,
stock market returns from 1990 to 2011 were actually below the long - run average!
Plenty
of studies warn against this, including one that shows that missing
out on just 10
of the best days in the
stock market over 160,000 daily
returns in 15
markets around the world can cause you to end up with about half
of what you would have earned if you had stuck with an index fund over time.
Some investors actually seek
out «pump and dump» ploys in the penny -
stock market in search
of lottery - like
returns, according to research on German
stocks by Christian Leuz
of the University
of Chicago's Booth School
of Business and four other economists.
A
stock as stable as Intel provides peace
of mind because
of its blue - chip status in the
market, but it also offers a way to carve
out excellent short - term cash generation by selling puts and calls every month or two for double - digit - percentage
returns.
As I've noted before, for an investor looking to capture all the
market's long - term
returns with substantially less downside risk, it would actually have been enough, historically, to simply step
out of the
market on a price / peak multiple
of 19 and then wait for a 30 % plunge before repurchasing
stocks, even if that meant staying
out of the
market for years in the interim.
First I need to point
out that Shiller is absolutely right on two
of his points; 1) you can't predict the
stock market with much accuracy and 2)
stocks do tend to have lower future
returns when they are expensive.
«If your employer matches, you want to max that
out because you won't get that kind
of return with the
stock market [alone],» said Zach Abrams, manager
of wealth management at Capital Advisors in Ohio.
Called a «rising equity glide path,» retirement experts Wade Pfau and Michael Kitces state that this strategy can help protect against the risk
of running
out of money, particularly when
stock market returns are poor early in retirement.3
But other experts say millennials should save much more, up to nearly a quarter
of their income, to avoid running
out of money in old age if
stock market returns fall.
So while we can't rule
out the possibility
of lifting a portion
of our hedges if the quality
of market action improves, I expect our
returns to be driven primarily by the difference in performance between the
stocks we hold and the indices we use to hedge (primarily the S&P 500).
Satisfy your customers and win in the
stock market, says a new study by a team
of researchers from Michigan's University Research Corridor, who found positive
stock returns on customer satisfaction far
out - distance competitive
market measures that have been in play for more than half a century.
«With an e-book there's no printing, no overprinting, no need to forecast, no
returns, no lost sales due to
out -
of -
stock, no warehousing costs, no transportation costs, and there is no secondary
market — e-books can not be resold as used books,» the company wrote.
With an e-book, there's no printing, no over-printing, no need to forecast, no
returns, no lost sales due to
out -
of -
stock, no warehousing costs, no transportation costs, and there is no secondary
market — e-books can not be resold as used books.
With an e-book, there's no printing, no over-printing, no need to forecast, no
returns, no lost sales due to
out of stock, no warehousing costs, no transportation costs, and there is no secondary
market — e-books can not be resold as used books.
«With an e-book, there's no printing, no over-printing, no need to forecast, no
returns, no lost sales due to
out -
of -
stock, no warehousing costs, no transportation costs, and there is no secondary
market — e-books can not be resold as used books,» the Amazon Books Team stated in July blog post.
In a printed statement the company said, «With an e-book, there's no printing, no over-printing, no need to forecast, no
returns, no lost sales due to
out -
of -
stock, no warehousing costs, no transportation costs, and there is no secondary
market — e-books can not be resold as used books.
With an e-book, there's no printing, no over-printing, no need to forecast, no
returns, no lost sales due to
out of stock, no warehousing costs, no transportation costs, and there is no secondary
market.
Unjustifiably high for SOME ebooks... With an e-book, there's no printing, no over-printing, no need to forecast, no
returns, no lost sales due to
out of stock, no warehousing costs, no transportation costs, and there is no secondary
market — e-books can not be resold as used books.
He takes the 10.31 % annual
return on
stocks from 1925 through the present and strips
out the tripling
of the
market's price / earnings ratio that's occurred since then.
Complementing traditional investments, Ross points
out that real estate is less volatile (unlike
stocks, it's not marked to
market every day); provides diversification with a favorable balance
of risk versus
return; is favorably taxed via capital gains tax treatment and interest deductibility; generates
returns similar to the
stock market and «often more»; provides principal protection; a hedge against inflation and a pension - like «monthly coupon.»
Over time these volatile periods in the
stock market's history have «evened»
out to a real «average
return»
of 8 %, however, unless your investment time frame is 50 or more years, you can not rely on these skewed
returns with any degree
of certainty.
That's the crux
of the problem Ayres and Nalebuff identify: you either have lots
of time and little money to take advantage
of the higher
returns on
stocks, or you have lots
of money and little time to ride
out the volatility
of the equity
market.
Dividend
stocks still need to be a part
of your game plan, as they can keep generating
returns even if the
market flattens
out.
Unfortunately, if pessimistic predictions pan
out that the U.S. economy will generate slower growth going forward, then
stock market returns of only five per cent a year would bring about the gloomier scenario.
To filter
out what he calls «short term noise in earnings,» and get a measure that affords a better fix on what kind
of prospective
returns one can expect from
stocks, John calculated the
market's P / E using the highest earnings posted over the preceding decade.
After 2002, Greenspan's rescue took effect and the
stock and housing
market experienced a brief period
of asset inflation, but the bottom eventually fell
out in 2008 when the S&P 500 delivered a -37 % total
return, which was followed by unprecedented monetary stimulus in the form
of Quantitative Easing.
The foundation
of a sound retirement investing strategy is setting a diversified mix
of stocks and bonds that's aggressive enough to generate
returns that can grow your portfolio during your career and help maintain its purchasing power during retirement — yet conservative enough so you won't bail
out of stocks every time the
market heads south.
Valuations have gotten stretched thanks to years
of low interest rates, and conservative income investors have moved their money
out of the bond
market and into
stocks in search
of better
returns.
In a note on how to profit from a
return to volatility, Mike Clements, head
of European Equities at SYZ Asset Management, writes that violent
markets enable
stock pickers to uncover value when the tide
of sentiment draws
out.»
Mauboussin points
out that most
of the research on historical
returns is based on «days when the
stock market had twice as many companies as it does today,» suggesting that the conclusions drawn could be misguided.
For example, if the
stock market tanks or delivers a string
of anemic
returns, especially early in retirement, the combination losses or low principal growth and withdrawals could so deplete your nest egg's value that you might run
out of dough sooner than anticipated.
Stock market ETFs
return close to 10 % (unadjusted) over long periods
of time, which will
out - earn almost any other option and are very easy for a non-finance person to invest in (You don't trade actively - you leave the money there for years).
My point is simply that it's very likely that if you are moving money in and
out of stocks based on volatility, you're much less likely to get the full
market return over the long term, and might be better off putting more weight in asset classes with lower volatility.
The poor value investor who got
out of the
stock market in the mid-90s as the earnings yield hit hit lows unseen since the late 60s — almost 25 years prior — would have sat
out much
of the fantastic
returns generated by the dot - com bubble.
As a number
of other analysts have pointed
out, there has been a growing divergence between the fundamental component and the speculative component
of European
stock market returns.
Instead
of packing money away in the
stock market hoping for a
return in years to come, you can learn how to develop a monthly income stream to pay your expenses today — and get
out of the Rat Race.
If you won't retire for many years, or even many decades, and are willing (and can afford) to take risk, you might be able to ride
out the
market's short - term fluctuations with the goal
of reaping the higher
returns that
stocks offer.
Since bottoming
out in March 2009 in the wake
of the financial crisis, the
stock market has gained an annualized 19 %, while bonds have
returned 4 % a year.
Since the beginning
of 2009, the year
stock market bottomed
out in the wake
of the financial crisis,
stocks have gained an annualized 15 %, while bonds
returned a more modest yet still respectable 4 % or so.
At the other end
of the spectrum are those who love and enjoy picking
stocks, performing short term day trades and figuring
out how to beat
market returns.