Just read the following article at Fool.com.
http://www.fool.com/investing/dividends ... tth0000001
Basically says that the S&P did fine over the past year decade, and that, if you count dividends, it's up around 43%, on the decade. That's basically 4.3% annually, which isn't too bad during a deflationary period.
Is this true?
The Lost Decade?
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The Lost Decade?
Last edited by AdamA on Thu Sep 08, 2011 12:14 pm, edited 1 time in total.
"All men's miseries derive from not being able to sit in a quiet room alone."
Pascal
Pascal
Re: The Lost Decade?
Over the last 12 months I think that is obviously not true.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
A: “Not unless round is funny.”
Re: The Lost Decade?
Sorry, MT. I mis-typed...edited above.MediumTex wrote: Over the last 12 months I think that is obviously not true.
"All men's miseries derive from not being able to sit in a quiet room alone."
Pascal
Pascal
Re: The Lost Decade?
That's because the further we go into 2011, the further 2001's crash becomes gains for us.
It'll continue into 2002.
It'll continue into 2002.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
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- Thomas Paine
Re: The Lost Decade?
First off, the author is using a linear chart, which is a poor way to compare long term data. Logarithmic is preferred for long term comparisons, since equal vertical distances anywhere in a logarithmic chart represent equal percentage changes in return.
Second, the chart conveniently omits the August 2011 downturn, nor does it account for general inflation. Now, even if you didn't pay any taxes, you still would have lost money in the S&P 500 since March of 2000:
http://politicalcalculations.blogspot.c ... -time.html
...Set the S&P 500 calculator to a start data of March 2000, and start with $1000 with $0 added each month. Press calculate and, drumroll...
With dividends fully reinvested (i.e. no taxes) and after adjusting for inflation, you would have lost -$137.73, which is a -1.32% Average Annual Rate of Return.
When you factor in taxes on each of those dividends, you did even worse. That's what they mean when people talk about a lost decade. Many investors defend the lost decade by saying that balanced portfolios did much better — which is true — but those portfolios tended to be very volatile in 2008, with about 25%-30% declines at times. I'm not sure there are too many people who have stuck to any plan over the past decade.
Second, the chart conveniently omits the August 2011 downturn, nor does it account for general inflation. Now, even if you didn't pay any taxes, you still would have lost money in the S&P 500 since March of 2000:
http://politicalcalculations.blogspot.c ... -time.html
...Set the S&P 500 calculator to a start data of March 2000, and start with $1000 with $0 added each month. Press calculate and, drumroll...
With dividends fully reinvested (i.e. no taxes) and after adjusting for inflation, you would have lost -$137.73, which is a -1.32% Average Annual Rate of Return.
When you factor in taxes on each of those dividends, you did even worse. That's what they mean when people talk about a lost decade. Many investors defend the lost decade by saying that balanced portfolios did much better — which is true — but those portfolios tended to be very volatile in 2008, with about 25%-30% declines at times. I'm not sure there are too many people who have stuck to any plan over the past decade.
Last edited by Gumby on Thu Sep 08, 2011 1:43 pm, edited 1 time in total.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.