RE: Investing

From: altamira (altamira@ecpi.com)
Date: Wed Jun 07 2000 - 15:50:38 MDT


Hey James,

Could you tell me how you calculated the 9%-13% annual return and what
adjustments you're referring to? Where did you get the data? When I was
doing my research, I had a difficult time finding info on stocks that
weren't included in indices such as DJ and S&P, even for fairly recent
years, much less for a couple of hundred years ago.

Bonnie

-----Original Message-----
From: owner-extropians@extropy.com
[mailto:owner-extropians@extropy.com]On Behalf Of James Rogers
Brian is correct. Depending on how you calculate it and the adjustments
you take into account, the average return of the stock market is in the
9-13% range annually when averaged over decades. Most people cite figures
in the 10-12% range, which Brian did. These figures go back to when the
American stock market was created in this country. In fact, investment in
individual stocks are among the very best long-term instruments in terms
of beating negative return factors such as taxes and inflation.

The mistake people make is forgetting that this is the average for the
entire market. If you put all your money in one or two stocks (especially
ones of dubious value), it obviously will not reflect the market as a
whole -- this is why diversification is so strongly recommended by
investment advisors. A properly diversified portfolio (or an index fund
if you are lazy) will never fail to yield good annual long-term returns
for all practical purposes. Short of a serious statistical anomaly and
poor investment practice, the stock market provides some of the safest and
best investment instruments available.

In short, a blind monkey with a diversified portfolio can expect an 11%
return over the long-term. A smart person with good investment practices
can usually do significantly better and rarely fairs much worse.
Unfortunately, there is an uninformed percentage of the investing
population that is not content to simply "ride" the market and tries to
beat it through pure luck, an unnecessary risk. These people should have
listened to the blind monkey.

-James Rogers
 jamesr@best.com



This archive was generated by hypermail 2b29 : Thu Jul 27 2000 - 14:12:46 MDT