Investment Myths Busted

Re: Investment Myths Busted

Postby millionairemind » Wed Nov 12, 2008 9:39 am

This buy and hold mantra was popularized in the 80s and 90s. If you just bot and held from 1982-2000, you will have made one of the greatest returns of all times..

The reason Y fund industry ask you to buy and hold is because of management fees. The larger the fund, the higher the management fees as a %tage of the fund under management.

It is most unfortunate that this is still the main way that ppe. invest cos' they do not know any better.. sigh...
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Investment Myths Busted

Postby winston » Wed Nov 12, 2008 10:01 am

Four Tips for Survival by Alan Farley

I have four pieces of cautionary advice for my at-home brethren. Listen up, because it's no longer a question of whether you want to take real money out of the market, or just add a few bucks to the weekly shopping budget. These remedial steps must be taken if you want to survive long enough to take advantage of the real opportunity.

1. Wait for the Market Volatility Index (VIX) to drop below 40 and stay there for a week. Massive price swings require equally massive stop losses, which rarely justify the intended positions. Your only alternative is to stand aside and do nothing, no matter how much it hurts to watch others playing those big rallies and selloffs.

2. Forget overnight positions until the index futures stop gapping 2% or more every morning. These price jolts are great news when you're on the right side of the trade, but total devastation if you're on the wrong side. And guess what? You're not smart enough to predict overnight direction from day to day. Neither am I.

3. End your love affair with popular stocks that made you money during the last bull market. In November 2008, these are the issues that will trigger the most painful and unexpected reversals, which happen right after you're absolutely convinced your position is the right play. The bottom line: They see you coming, sucker.

4. Get control of the time element in your market strategy. You're getting killed because you have no patience and forgot how to sit on your hands when your trading edge isn't in play. Realistically, it could be months before the market works for you again. Would you rather wait it out and survive, or stay busy and get crushed?
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Investment Myths Busted

Postby HengHeng » Wed Nov 12, 2008 10:06 am

Well buy and hold still can work just only in reverse order.

If one shorted since last december , he would have a filthy rich man.
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Re: Investment Myths Busted

Postby iam802 » Wed Nov 12, 2008 10:09 am

Fund managers should take a cut of the PROFIT.

That will be the best reward. And we can tell them.... don't need to say so much. Just show me the MONEY (or PROFIT)
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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Re: Investment Myths Busted

Postby millionairemind » Wed Nov 12, 2008 10:18 am

HengHeng wrote:Well buy and hold still can work just only in reverse order.

If one shorted since last december , he would have a filthy rich man.


Yours will be SHORT AND HOLD....

99% of mutual funds are buy and hold... due to mandate. ;)
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Investment Myths Busted

Postby HengHeng » Wed Nov 12, 2008 10:20 am

hmm ya i shorted and held but not all the way coz i hum. LOL


But ok lah .. decent profits along the way though.

Now as long as i never lose money in 2008 i champion liaoz less to say win money LOL
Beh Ki Jiu Lou , Beh lou Jiu Ki lor < Newton's law of gravity , but what don't might not come back

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Re: Investment Myths Busted

Postby winston » Tue Dec 30, 2008 9:21 am

The Biggest Investment Surprise of 2009 by Alexander Green

Pessimism about the U.S. economy and financial market is so thick right now you could cut it with a knife.

I'll be the first to admit that times are tough. But Americans have seen tough times before. And we have always prevailed.

Too many investment myths have gone unchallenged lately. Today I plan to refute them - and explain why financial markets are likely to perform much better than most investors believe in the year ahead.

Let's begin by examining the four biggest investment myths circulating right now:

Myth #1: The Era of Free Markets is Over

It's true that many of the apostles of free-market economics have begged Congress for government intervention during the current crisis. But nobody is seriously arguing that Uncle Sam should nationalize the economy, set wages and prices, or establish production quotas.

The free market still constitutes the best means of securing prosperity over the long term. (Just ask the Chinese. Three hundred million people there have been lifted out of poverty over the past three decades.) We will find ways to make free markets work better - not abolish them.

Myth #2: The United States Has Lost its Competitive Edge


The reality is the United States continues to lead the world in innovation, technology, higher education, worker training and the ability of the labor force to move from one job to another.

Three months ago, the Swiss-based World Economic Forum released its global competitiveness report and, once again, the United States topped the list. The study further noted that our strong productivity will help us "ride out business-cycle shifts and economic shocks" better than most countries.

Myth #3: The United States is No Longer an Attractive Market for Investment

Yes, the Fed's move to take interest rates near zero has predictably knocked the dollar for a loop again. But that isn't deterring foreign investors. Perhaps they know that the biggest bargain of all is inexpensive assets in a cheap currency.

According to the World Bank, the United States attracted more than $2 trillion worth of foreign direct investment last year. Britain, Hong Kong and France - the next three top finishers - each registered less than half as much. The United States remains the economic engine of the world - and smart capital will continue to seek a home here.

Myth #4: U.S. Financial Markets Will Take Decades to Recover

In the more than 200-year history of equity investing in the United States, stocks have never taken decades to recover. Those who argue they have always omit dividends. Dr. Jeremy Siegel of the Wharton School points out that even if you invested a regular amount in the Dow every month beginning at the market peak in 1929, within four years you would still have outperformed someone who invested the same amount each month in T-bills. (The key is regular investment and reinvested dividends.)

The Nikkei 225 in Japan, of course, is still down more than 70% from its peak in 1989. Could the United States be headed for the same long, deflationary spiral? That's extremely unlikely. The Japanese real estate and equity bubble was much bigger, government action there was clumsy and ineffective, and the banks were not cleaned up quickly or efficiently. Congress and the Federal Reserve are being much more proactive here.

It's true that the economy is in for a few rough quarters. Understandably, the media is focused on the bad news. We all know that hundreds of thousands of jobs have been lost. Venerable names in banking and finance are no more. American automobile manufacturers are begging Congress for a lifeline. Residential real estate and the stock and corporate bond markets have all taken it on the chin.

But there are reasons for optimism, too. Oil has plunged from $147 a barrel to less than $40. Low interest rates will ultimately make it cheaper for businesses and consumers to borrow. A cheap greenback boosts exports and makes U.S. assets inexpensive to foreign buyers. And fundamental valuations on stocks are the cheapest they've been in 17 years.

Make no mistake, 2009 is going to be a tough year for the economy. But the financial markets - always looking forward - have already discounted this and could surprise you in the year ahead.

So don't get waylaid by the gloom-and-doomers. There are always attractive investment opportunities out there and right now is no exception.

Let's buck the trend together - and look forward to a happy, healthy and prosperous New Year!
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Investment Myths Busted

Postby Musicwhiz » Tue Dec 30, 2008 9:33 am

Thanks for the article Winston. I would like to point out that dividends (as mentioned in the article) do play a role in enhancing returns for shareholders over the long-term, but this is too often omitted when people discuss "buying the index and holding over 10 years and yet achieving nothing". They usually forget to include the dividends. If they do, I am sure an investor will still see a positive return, albeit small. :)

Cheers !
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Re: Investment Myths Busted

Postby winston » Wed Jan 28, 2009 8:51 am

A Eulogy for "Buy & Hold Investing" by Gary Halbert

IN THIS ISSUE:

News Flash - Buy-And-Hold Is Dead
Or Is It?
The Bottom Line
Actively Managed Programs That Work
Niemann Equity Plus - Master Of The Universe
Scotia Partners - The Best Defense Is A Good Offense

http://www.investorsinsight.com/blogs/f ... sting.aspx
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Investment Myths Busted

Postby winston » Wed Mar 04, 2009 4:34 pm

Beware: Bear Market Brings Out Tall Tales! by Gary Halbert

IN THIS ISSUE:
Two Valuable Investment Articles To Share
Stocks Hit 50% Drawdown In February
Investors Naturally Seeking Guidance
Some Buy-And-Hold Advice Is Misleading
Another Active Money Manager Doing It Right
Conclusions – Don't Be Misled

http://www.investorsinsight.com/blogs/f ... tales.aspx
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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