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alstry (35.41)

What Warren DIDN"T tell you

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27

October 21, 2008 – Comments (7)

In his op ed piece...Mr. Buffett, in justifying buying stocks now makes the following statement:

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

First, let's make one point clear...No One can see the future.....not Mr. Buffett, Alstry,nor anyone else for that matter.  So when playing with stats, for the deft hand, one can come up with almost any persuasive conclusion to meet their desired ends.

Yes, from 1900 to 2000, the DOW rose from 66 to something over 11,500 producing about a 6% compounded rate of return INCLUDING dividends.  What Buffet fails to mention is that almost all of that return was produced in the second half of the century...from 1950 to 2000....the years Buffett enjoyed his high returns.

Since 2000, the DOW has produced NEGATIVE returns.  If last century is any indication if this century...which it is NOT, we only have 42 years to go before we can expect to get some decent returns.

The point here is to think each time you read something...there is always two sides to a coin....Warren throwing in a small percentage of his net worth is very different than someone going all in with his retirement plan waiting for 10 years after they die to see their money come back.

Again, no one knows where things are going...hyperinflation or deflation..rising market or crashing market...but becareful drawing any conclusion from a limited biased perspective presented by anyone....especially Alstry.

7 Comments – Post Your Own

#1) On October 21, 2008 at 12:04 PM, russiangambit (29.25) wrote:

Quite agree.

The elephant in the room right now is 401K. It is safe to say that 401Ks lost 50% or more this year. Since the US proclaims to believe in free market above all else, the US social programs are underloved and insolvent. SSN, Medicare are not much but even they are going to be banckrupt.401K was supposed to compensate for all this.

After all the stock market is "supposed" to return on average 7% over long term, you just by and hold mutual funds. Now people are starting to realise that "supposed" was the operative word here, supposed but not guaranteed.

The US government must understand that unless they manage to reinflate 401Ks somehow, they are going to be in big trouble. Remember the outrage4 when perople at Enron lost their 401Ks?

I am midly curious what are they going to come up with to get money flowing into stock market again. I am only mildly curious because another part of me is afraid to contemplate just what it might be. Nothing good, I am sure.

Since the politicans don't even have the nerve to tell fellow Americans that they need to save more and spend less, and that the right to own a house is not actually guaranteed anywhere in the Consititution; I doubt they will be able to deal with the situation honestly and responsibly. So, now prepare for more lies.

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#2) On October 21, 2008 at 12:05 PM, devoish (98.57) wrote:

Again, no one knows where things are going...hyperinflation or deflation..rising market or crashing market...but becareful drawing any conclusion from a limited biased perspective presented by anyone

Agreed... but you still have to make a decision.

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#3) On October 21, 2008 at 12:07 PM, alstry (35.41) wrote:

Dev,

That is why you have 99+ rating.

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#4) On October 21, 2008 at 1:37 PM, EScroogeJr (< 20) wrote:

50%? No way. You'd have to buy once in Oct last year and sell last week to manage a mere 39% loss. And nobody puts all his 401 in the stock market.

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#5) On October 21, 2008 at 4:41 PM, russiangambit (29.25) wrote:

> 50%? No way. You'd have to buy once in Oct last year and sell last week to manage a mere 39% loss. And nobody puts all his 401 in the stock market.

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Yes, I did mean 50% from the top. Or flat for the last 10 years. Is it any better? And you'd be surprised how many people have all at least 80% of their 401K in equity mutual funds. And those mutual funds are not the best ones either.

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#6) On October 22, 2008 at 3:19 AM, saunafool (98.77) wrote:

Alstry,

You make a good point. Past returns are not indicative of future performance. However, I have a question:

If everything is going to hell, what do you do about it? I mean, if oil and gold can't protect your investments, and you don't want to short, then what?

I used to work with a bunch of guys who invested from the 70's through the 90's. This was before the boom of the late 90's. They used to say, "Invest in the big American companies--JNJ, GE, KO, XOM. If they all go out of business, then everyone is living in the dirt anyway, so who cares if you lost your money."

I find myself thinking that quite frequently these days. Sure, my account has been trimmed 30% from the peak, but so what? I have 30 years to recover, and for the first time in my adult life stocks are cheap. I know things will likely get worse, but the chance of global financial collapse is slim. Even then, there will be survivors.

So, whenever the market drops 500 points or more, I force myself to buy something. GE, DOW, JNJ, NOK, OII...

I guess my point is this: your pessimism has been right for the past year and your score proves it. But when does it end? And if you don't think the downturn ends, what do you do to protect your wealth?

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#7) On January 20, 2009 at 2:07 PM, Wookie819 (35.06) wrote:

All you CAPS player out there with the thumbs down are going to get killed when we start our comeback. That's because your scores are inverse to the market. Try finding some winners, and find a solution instead of predicting the end of the world for once.

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