Random Thought of the Day

Quote: PotPie

That is very, very true and is the reason why I and millions of others have turned to index funds.

If an investor doesn't do this then he is in the predicting business.

With index funds you are only predicting that the overall upward bias of the market as a whole will continue during the duration of your hold.

For many, including myself, this means decades.

Still, of course, no guarantees. But no sleepless nights.

The worst that I've been thru was the dotcom bust which iirc lasted 2.5 years.

Many might consider this strategy way too tame. I don't care. I'm not going to pretend that I can predict stuff. Anybody can call me a wimpy investor if they want. I can take it.

There is absolutely nothing wrong with that and it is an extremely safe form of long-term investing where you just, "Set it and forget it," occasional years of panic (for some) aside.

It would appear that the DOW average closing price for 1998:

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

Was $8630.76, whereas the average closing price last year was $32,897.35.

With that, ignoring any fees, a straight up DOW Index Fund has returned 32897.35/8630.76 = 381.16% (rounded) on investment, which reflects 281.16% profits on investment.

In the meantime, we look at this CPI inflation calculator:

https://www.bls.gov/data/inflation_calculator.htm

And see that $1,000 in December of 1998 has the same buying power as $1,810.84 in December of 2022. In the meantime, your investment of $1,000 would now be worth $3,811.60 (rounded) before fees and any applicable taxes.

It's extremely good and extremely safe. Maybe if things time themselves very poorly you end up putting off retirement for a year or two while you wait for a rebound, but there are worse fates. As long as you're not close to retirement, my general advice to load up during a recession still holds.

True story.

In the 70s I worked as a teller in a bank. It was a period of runaway inflation.

One morning I turned around a looked at the cardboard ad for the CD rates, and I did a double take.

One of the CDs was paying 19% interest.

I couldn't believe it. Of course, I was very young and didn't have significant money to put into it.

Index funds are just for people that can't pick stocks. All of my money is going into Bed Bath & Beyond and Party City (that helium shortage can't last forever).

Quote: DRich

Index funds are just for people that can't pick stocks. All of my money is going into Bed Bath & Beyond and Party City (that helium shortage can't last forever).

I have my money basicly divided in 4 areas
Index fund
Conservative investment fund based on 2025 retirement
Conservative investment fund based on 2030 retirement
My stocks that I myself picked

Quote: DRich

Index funds are just for people that can't pick stocks. All of my money is going into Bed Bath & Beyond and Party City (that helium shortage can't last forever).

LMAO! That was really good. All-time classic.

Almost 50% of my trades last year were bearish AAPL.

One reason is Buffett is getting older (too old).

Since stocks are zero sum, I just wait until AAPL looks like a peak after they execute their buybacks, so I can profit off Warren's money.


I make a good living off of Warren.

Another good thing about Warren's stocks, is when the SEC reports come out, they show what he bought.

Many pile in at prices too high.

I wait for the momo to peak (stochastics) and hammer them.


Another good strategy is anti-Cramer.

Especially DIS.

Always hammer DIS at peaks.

I have one more aggressive position.
VGT - Vanguard's information technology ETF.
It does track an index but because it's technology it's carries more risk and more potential return than their 500 Index Fund.
It has outperformed the 500 Index Fund by a lot over the last 5 and 10 years.
And also lost quite a big more in 2022.

That's primarily AAPL, MSFT, & NVDA.

Apple has a store in the mall near me where I do some of my daily walking in the winter.
Never before in my life have a seen a store like that.
The mall could be completely dead and that store is still rocking.
On the weekends there's no room to breathe in the store and they have a long line just waiting to get in.
And of course, there's no discount at all for any Apple product. Pay full price or walk. No sale ever. And I think a comparable product from them is way higher than Microsoft.
Incredible.