The 21st Century has not been kind to equity investors in the United States:
What's more, it's been even less kind to those investing in stocks in other nations.
What to do? Where to hide? Even bank accounts give us virtually no interest today. How can we get actual real returns on our savings?
Last edited by helmuth_hubener; 05-07-2015 at 11:05 AM.
Just a note. 21st Century started in 2001- not 2000. The chart needs re-adjusted.
January 1, 2001 the Dow was 10646.15 http://www.automationinformation.com...01_to_2008.htm
Today it is 18,000- an increase of 7,354 or 70%.
Last edited by Zippyjuan; 05-07-2015 at 04:04 PM.
I wonder how BRK_A will fare in a melt down crunch? Perhaps we'll learn how much of it's per share price is lost purchasing power FRN vapor and fluff.
Last edited by Ronin Truth; 05-07-2015 at 04:01 PM.
No, the chart just has bonus data. Consider yourself blessed with additional context. Feel free to cover up the left-most half-inch with a piece of paper, Peter, to achieve the chart that you desire.Originally Posted by Zippyjuan
Who is Peter?
Here is what I propose as a safe, easy, reliable solution:
"PP" is for "Permanent Portfolio". It is what I use myself. It works very nicely. It gives you remarkably steady real returns with low volatility. Stocks won't always give you real returns. Sometimes they will fail you for long periods of time, as the chart in my OP shows. Bonds won't always give you real returns. Cash won't always give you real returns. Gold certainly won't always give you real returns. But put them all together, and you get a beautiful synergy.
Here's one that thrives on volitility.
http://www.wealth-building-101.com/a...anagement-aim/
Oh, and "just a note":
False.
Have you used this algorithm trading system, Ronin?
Yes, and improved variations.
What are your returns?
They vary. Much better than guessing or throwing the dice. Try it out.
Well that's fantastic to hear. Good for you.
As for me, I'll have to pass. Sorry!
I have instead chosen a strategy with a decades-long track record of proven, real, forward-looking (not back-tested) returns.
I have instead chosen a strategy that should perform decently and keep my savings safe in all possible economic conditions.
That is, it has an exceptionally strong theoretical basis to rationally believe that it should give a safe, steady return, and also an exceptionally strong empirical foundation proving that it does, in fact, give a safe, steady return.
Also, what's interesting in light of your comment is that it, too, thrives on volatility. It was designed to accept and deeply embrace volatility. Harry Browne, the designer, sought the most volatile manifestations of the three asset classes he could find. You want the longest-term bonds possible, because the longer they are, the more volatility you get. You want pure gold, because it's extremely volatile. And if there were a way to get a basket of stocks that would be like the stock market overall except for more volatile (higher highs, lower lows), you'd want that for your PP too, but unfortunately research seems to show that that's not reliably possible. So with a PP you have these three very volatile assets, and then automatic re-balancing bands along with a big pile of cash allows you to capture that volatility in the form of gains.
Ok, no problem, whatever.
I'm just very skeptical of people with Secret Systems(TM) that claim to be able to beat the market. It's not science. It's not real. It's, in my humble opinion, for the rubes. I'm just not their mark. But I'm glad that it's making you so much money.Ok, no problem, whatever.
The Dow didn't return to 1929 levels until 1954. If you avoided US stocks over the last century, based on a 1929-1954 chart, you would have missed incredible gains.The 21st Century has not been kind to equity investors in the United States:
What's more, it's been even less kind to those investing in stocks in other nations.
What to do? Where to hide? Even bank accounts give us virtually no interest today. How can we get actual real returns on our savings?
You're ignoring dollar-cost averaging. You average your holdings into lower cost tranches by acquiring more shares during the downturns and acquiring fewer shares during the upswings. Therefore, your returns are amplified and not constrained to "Buy on January 1st of 2001 one time and holding into perpetuity"
Plus, you have dividends to consider. Reinvested, I would say you're doing quite well.
It's a mistake to not invest in some of the best businesses around, which are what the S&P and Dow contain for the most part. If you avoid buying stocks because one day in the future there's a crash (there always will be one), or scared that a 15 year time period you're "flat" when you look strictly at the start and end points, you miss the bigger picture---that you had some of the best buys of a lifetime presented to you, but you were hesitant to enter the market for fear of capital loss or stagnant returns, when in reality every drop in American history has proven to be an incredible buying opportunity.
Even if you assume the economy will only grow at 1% a year for 20 years, after a generation, that's over 20% growth in wealth. That's a huge gain given where we are today. Look at the "poor" of today; they have cell phones and televisions. 15 years ago for cell phones that was unheard of---10 years ago a basic 42 inch LCD cost $5000.
Bottom line, it's a mistake to place a perma-bear bet on stocks. You can pick your peaks and make a chart and find that over a time series of X number of years, you made "nothing"....but then again, the Dow didn't reach 1929 levels until, what, 1954? Looking at the world that way, you could have avoided US stocks for the past century. I wonder how much money that would've cost you. Businesses grow wealth. To want to stay away from that, in my opinion, is a serious mistake. Allocating capital of, say, $100 every two weeks into the markets, over the long run, will produce the best practical results. You buy less shares at high prices and more shares at low prices. Benjamin Graham advocated dollar-cost averaging in The Intelligent Investor, and I would tend to agree.
This fund offers "Permanent Portfolio" investing Reported returns (as of March 31st 2015): http://www.permanentportfoliofunds.com/pd_perf.htmHere is what I propose as a safe, easy, reliable solution:
"PP" is for "Permanent Portfolio". It is what I use myself. It works very nicely. It gives you remarkably steady real returns with low volatility. Stocks won't always give you real returns. Sometimes they will fail you for long periods of time, as the chart in my OP shows. Bonds won't always give you real returns. Cash won't always give you real returns. Gold certainly won't always give you real returns. But put them all together, and you get a beautiful synergy.
Before taxes and fees:
1 year: -1.93% (minus)
5 Years: 4.49%
10 years: 6.87%
They compare those returns to the S&P 500 for the same periods (not including dividends):
1 year: 12.73%
5 Years: 14.47%
10 years: 8.1%
Last edited by Zippyjuan; 05-08-2015 at 05:17 PM.
What is incorrect?
Nothing secret about it. It's just all right there, in the book, and on the web.
Was Ben Graham's investing system a secret or did Warren Buffet just follow the recipe?
When you can buy a dollar's worth of assets for 50 cents, load up. It obviously works out pretty well.
Last edited by Ronin Truth; 05-08-2015 at 08:03 PM.
Botscript.
'We endorse the idea of voluntarism; self-responsibility: Family, friends, and churches to solve problems, rather than saying that some monolithic government is going to make you take care of yourself and be a better person. It's a preposterous notion: It never worked, it never will. The government can't make you a better person; it can't make you follow good habits.' - Ron Paul 1988
Awareness is the Root of Liberation Revolution is Action upon Revelation
'Resistance and Disobedience in Economic Activity is the Most Moral Human Action Possible' - SEK3
Flectere si nequeo superos, Acheronta movebo.
...the familiar ritual of institutional self-absolution...
...for protecting them, by mock trial, from punishment...
I shouldn't have to gamble my money just to maintain its value and try to beat inflation
A savage barbaric tribal society where thugs parade the streets and illegally assault and murder innocent civilians, yeah that is the alternative to having police. Oh wait, that is the police
We cannot defend freedom abroad by deserting it at home.
- Edward R. Murrow
...I think we have moral obligations to disobey unjust laws, because non-cooperation with evil is as much as a moral obligation as cooperation with good. - MLK Jr.
How to trigger a liberal: "I didn't get vaccinated."
ROFL
There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
- Milton Friedman
Right. And I don't think that you do have to. Look into the Permanent Portfolio.
If there was a no-risk guaranteed way to invest and always beat inflation, everybody would be doing it. All investment has risk. Not investing has risks too.
Not for money you cannot afford to lose.
Every strategy with the potential to out-perform the market average also comes with the built-in potential to under-perform the market average. It's part and parcel of the same thing. You can't get the one half without the other.
To entrust your hard-earned wealth, your life savings representing years of struggle and toil, to supposed Mathematical Secrets that are guaranteed to algorythmically multiply them -- to do that is an absolutely tragic mistake that I'd prefer for all the liberty-loving denizens of Ron Paul Forums to avoid. You worked too hard for that money to entrust it to someone's grand scheme to double it.
It won't work. It never works. Presence, you can give exactly as much evidence of the safety and efficacy of your ever-changing scripts as Ronin can of his "strategy". That is: none.
Actually, no, I don't think that they would.
Comparison of returns: (Stocks being represented by the Vanguard Total Market index fund and portfolio rebalanced at the end of the year):
http://www.aaii.com/journal/article/...wealth?adv=yes
Looks like stocks may be better long- term though more volitile.
Well, it just depends, Peter. A 100% stock portfolio will probably outperform a 25% stock portfolio during times when the stock market is doing exceptionally well, such as the 1980s and 90s, or the 1950s. On the other hand, 100% stocks will probably under-perform during times when the stock market is incurring losses, such as the 2000s, the 1960s and 70s, and the 1930s and 40s.
Whoa. Deep, huh?
Times of prosperity and growth -- times of which the US has had a lot of, an out-sized share of, for the past couple hundred years -- are good for stocks.
Who'd've thought?
Here's the thing:
Times of recession are bad for stocks. But... good for cash!
Times of high inflation are bad for stocks. But... good for gold!
Times of deflationary depression are bad for stocks. But... good for bonds!
Do we know for sure that more good times and prosperous decades are ahead for the United States? Perhaps you know for sure, Peter. You seem to have a crystal ball, after all. But me, I don't. And because I actually accept and embrace that I don't know, I invest conservatively. I diversify.
though more volatile.
Understatement city! Yes, the stock market is more volatile. It's much more volatile! It's incredibly volatile!
In real life, people with 100% stock portfolios do not do well, precisely because it is so volatile. There are, in fact, very few people of any significant net worth who have 100% stock portfolios. That should tell you something. They realize that holding such a portfolio would be incredibly reckless.
Volatility is the killer of returns. The absolute killer. There is a human element in investing, and the fact is that volatility kills returns when actual humans are involved, because they will pull out at the wrong times and then get back in at the wrong times. There is also an absolute uncertainty element: what goes down does not necessarily go back up. Ever. You just don't know. You never know. No one does.
The Permanent Portfolio solves a lot of these problems with investing in an elegant way.
Here's the volatility of the stock market:
There's some red blotches there when an investor had to wait for very long periods of time to finally get out of the red.
On the other hand, here's the stability of the Harry Browne Permanent Portfolio:
Just smooth and steady. Positioned for whatever the future may bring, for rain or shine.
Last year the portfolio would have lost two percent while stocks (the S&P 500) gained almost 13% (yes, one year is not representative of long term gains or losses).
http://www.permanentportfoliofunds.com/pd_perf.htm
Your charts cover two very different time periods. Do you have any which cover the same time periods for better comparisons? Thanks.
How would the Permanent Portfolio have performed in those years you point out that were bad for stocks (noting that stocks are one quarter of the Portfolio and with a gold standard the price of gold - also one quarter of the investment- hardly changed)?
True for all investments including the Portfolio.There is also an absolute uncertainty element: what goes down does not necessarily go back up. Ever. You just don't know. You never know. No one does.
It is true that the PP will not beat the highest returning investment it contains (it can't). It will also not do as bad as the worst item in it. It does not intend to do either of those but to tread the middle ground. Are there investments which have done better? Yes. Investments which have done worse? Yes. Is the PP the best possible investment? Nothing can make that claim and stay on top all the time. Has it performed well overall? Yes.
Last edited by Zippyjuan; 05-13-2015 at 05:42 PM.
Yes.Your charts cover two very different time periods. Do you have any which cover the same time periods for better comparisons?
False. You speak of things of which you know nothing.
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