Dow 15,000 Not Awful

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Dow 15,000 Not Awful

Postby William Million » Fri May 10, 2013 9:05 am

Well, it's not 36,000 as analysts James Glassman and Kevin Hassett promised in their Nov 2000 book. However, 15,000 really isn't bad, depending how you look at it. Up from 8,500 in May 2009, or up from 4,400 in May 1995. (Although only up from 11,000 in May 1999.)
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Re: Dow 15,000 Not Awful

Postby am » Fri May 10, 2013 11:46 am

Well considering were at 14000 in 2007, not so good especially when you factor inflation. But no one promised anything as far as returns.
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Re: Dow 15,000 Not Awful

Postby LH » Fri May 10, 2013 12:39 pm

in 4/2007 I did an internal rate of return, it was 12 percent.

I did an internal rate of return 1/13 and it was 7.35 on my largest account.

Not inflation adjusted.

But anyway, we are in range of the usual returns that the stock market expectedly gives of 7 percent real (some say more like 6ish) and 10 percent nominal for a buy and hold investor buying along the ups and down of the market.

This is pretty normal what we have been through, and the stock markets total return that my portfolio is getting (including dividends, which are included above in the IRR) bears it out.

Those average returns of 7 real 10 nominal are average returns, sometimes your portfolio will be higher or lower.

But looking back at 30s depression, 70s stagflation, the last 20 years all seems pretty normal.

If you keep buying and holding, you will not be acquiring at the peaks, you will be buying more stock at the lows (due to DCA, which then unfortunately works in reverse in decumulation stage, you sell more stock at the lows, no free lunch).

DOW 15000 seems pretty standard behavior, given the buy opportunities long term passive investors have had.

1)Passive indexor who does not capitulate :Keeping accumulating =>buying low on average.

2)human nature is to do the opposite. Its just how we are geared to buy buy buy when things feel good, then disaster strikes, then sell low. The behavior ===> buy high, sell low.

So same history, two different realities depending on behavior.

So for a passive indexor accumulator, DOW 15000 is par for the course.
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Re: Dow 15,000 Not Awful

Postby MnD » Fri May 10, 2013 12:49 pm

I started our program of regular equity share buying when the Dow was right at 1500, so 15,000 has a nice ring to it.
5 more years of accumulation to go. :happy

The guy down the hall (almost my age) tried to convince me that "we" have just gotten back to "even" in "the market".
He didn't like my Dow 1500 observation or comments about dividends, small caps etc. :mrgreen:
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