Posted on 09/08/2010 12:07:20 PM PDT by SeekAndFind
(Excerpt) Read more at businessinsider.com ...
For those who have been putting a lot of their 401K on the S&P 500 index, it is CLEAR who isn’t winning.
How do you compare that to Social Security?
See Matthews India Fund.....
sobering. With the exception of a very few stocks (none of which are on the S&P, I am out of the market.
ping for later.
With the exception of a few hundred dollars, I’m out of the market all together. Paying off debt and looking to buy 40 acres. Should be debt free by the time I’m 55 and living on a small self sustaining hobby farm.
Consider a a broader diversification like a ETF investing in BRIC. Brazil, Russia, India, China.
Sadly Americans traded their liberty for a TV clicker.
yes - MINDX has done well. I got into that one at beginning but bailed at its first crash and broke even. I then moved those funds into FXI which has done even better than MINDX but - certainly not lately. Both China and India peaked in 07 and only now moving back up. One has to have a strong stomach for those funds but when they blitz they do quite well and certainly much better than the US stock mkt. I also have a chunk in EEM which I like. but again one has to be willing to be a long term investor and be willing to ride it out at times which is not for everyone
Well, at least Hindi is easier to learn than Chinese;)
RE: Well, at least Hindi is easier to learn than Chinese;)
Also, learning it might not be necessary, most of the educated ones ( at least those who went to school ) speak English.
Here’s the other thing that’s sobering — 90% of all mutual funds out there DO NOT outperform the S&P 500 in any 5 year period according to those who have looked at the data.
If the S&P is stuck and negative compared to what it was 10 years ago, how do you think the other funds are performing?
So the Internet Bubble burst before India and China took off. So?
While the chart makes certain stock exchanges/indexes look impressive or dire (in terms of their performance), depending on your point of view (where YOUR money is), I wonder what this graph would look like if the data was weighted by the market capitalization of the different indexes represented.
RE: I wonder what this graph would look like if the data was weighted by the market capitalization of the different indexes represented.
Here’s my question. From the point of view of whether you are making or losing money, would the market capitalization weighing make any big difference if you were heavily invested in the S&P on or before 2000 ?
Isn’t that the bottom line for investors ? Whether my capital investments are safe and making a profit ?
“would the market capitalization weighing make any big difference if you were heavily invested in the S&P on or before 2000 ?”
All I can tell you is this:
When I once asked the person I trust the most on these matters - the man who was the Chief Investment Officer for a big pension & insurance outfit that I worked with - how he felt about some of the high-flying Asian stock indexes, he said:
Well, if you look at market capitalization, how big are they?
I said, why do you care?
He said: let’s assume a particular market is “doing better” but, if you look at markets as though they were ponds, and one is a very big pond and one is a very small pond, does “spectacular” stock performance REALLY AND COMPLETELY represent SPECTACULAR VALUE, in the long run, or is a certain amount of that “performance” derived from the number of players trying to get into a small pond, versus the number of players playing in the big pond. And he added, if you are looking to keep your universe of “invested assets” diversified, keep in mind also that the bigger pond might have a certain “AVERAGE” performance, it also represents a larger number of possibilities one can invest in, which, although part of that “average” performance, may in fact, exceed that average on their own.
Like an old philosopher who presents as many questions as answers to the student, I didn’t come away with a definite idea of whether or not one should be wholly invested in the current “high flying” Asian markets or not.
What I did observe, with that pension fund, from that time and up till now, is: (a)it continues to invest a portion of the portfolio in some Asian stocks and some Asian stock indexes, however (b) that portion has never been a majority of the total portfolio and yet (c) it has continually outperformed the major U.S. stock indexes, even though the majority of the portfolio IS in stocks that are traded within those indexes.
To show WHY the graphs move as they do, it is necessary to only add “the price of oil” and “nbr of democrats in Congress” to that chart.
The BDI is the leading indicator - I see they omitted it.
RE: it has continually outperformed the major U.S. stock indexes, even though the majority of the portfolio IS in stocks that are traded within those indexes.
Yes, but my BOTTOM LINE is still this -— Is it doing a good job of making money or at least preserving the capital (minus inflation) for you, the investor on or before 2000 till now?
Look, if a major index is down 10% and your fund is down 5%, it gives no comfort to know that you’re losing less money than that index. YOU’RE STILL LOSING MONEY and that is my bottom line.
I owned Matthews India and Matthews China and sold them when I still had about a 30-40% gain. They were up 70-85% at one point. I held too long. However, I am glad I bailed when I did. I WISH I had bought back into the India fund. It has recovered drastically. The China Fund is just getting back up close to where I sold it.
The other widely cyclical fund I owned once is called the Russia fund. It tends to go up and down with the price of oil.
Again, whether or not you are “losing money” depends on your perspective - long or short term, which includes how stable (how long term) you believe the relative value (compared to other value sets) of what you add to your assets will be - over EITHER the short term or the long term.
Pension plan assets CAN NEVER be based on simply chasing after the rich, but volatile and risky short term gain of an individual stock, or stock index, that appears (at the moment) to be doing very well.
If it’s long term pension fund investing that you are doing, the kind of strategy you seem inclined to has you chasing a chimera because in that pursuit you are just as likely to (1) NOT BUY into such things until the mid-point of their seeming rise has already occurred and (2) NOT sell before the mid-point of some later decline they experience has already happened and thus the mere paper value of the day (what the market says something is worth today - which is ONLY an actual gain to you if you sell it) - will NOT be, over the long term a bigger “gain” (because “gain” is not merely today’s “market value” but the value-difference between what you pay for an asset and what you can get when you SELL IT (cash it in).
It is no wonder that so many long term investors follow the type of strategy that people like Warren Buffet uses; who buys companies and stocks in companies which he and his staff have thoroughly analyzed and greatly believe are doing very well in their industry and have the wherewithal to continue to do so - NOT BECAUSE EVERYONE ELSE IS CHASING THEIR STOCK’S VALUE TODAY.
Again, beware of your present idea of “loss”, which you mistake as merely today’s stock price, and not the spread between what you pay for an investment asset - 5,10,15,20,25,30,35 years earlier and what you can cash it in for 5,10,15,20,25,30,35 years later.
In the that long term value analysis, some investment analysts believe buying in some Asian stocks and Asian stock indexes today, at this time, may already represent buying an over-valued high (paying a premium if buying in today) IN PART on the belief that after three decades of very robust Asian economic growth-rates (which has helped spur their recent stock market gains there) that such growth rates are due to mellow (become less robust) and that 100% of the current expected future value of many Asian stocks (factored into the stock prices today), paid in today’s dollars, may not materialize.
Many who are buying into Asian stocks and stock indexes JUST NOW (because of how their PAST performance looks) may be disappointed later on, whereas some of those who “bought in” 10 or 15 years ago, may already be taking SOME of their gains and NOT expecting future performance to match past performance; and, as typical long term investors do, parking those gains where they believe they will PRESERVE value over the long term (moderate year to year gains that present significant gains when compounded OVER THE LONG TERM).
The only people who have extreme actual gains that match extreme market performance of a stock or stock index are usually, mots often, also those who always buy in BEFORE it looks so good, NOT those who are buying in AFTER that past performance is recognized. Unfortunately, they are also the ones who buy in early on things that obtain big losses, either quickly or over the long term, and thus they often have extreme losses that moderate the value of their extreme gains. They chase today’s stock values NOT buy a piece of a “valuable” company. The average citizen, the average personal investor cannot play in that league; it is 100% their own money at risk and to play that strategy alone risks everything in it. A Goldman Sucks can afford to play that game, because they have other assets, and other peoples assets, with which they are playing many other types of investment risk scenarios and thus even they DO NOT put ALL their assets into an “Asian stock” or “Asian stock index”, or any other limited-investment-universe risk scenario.
The only LONG TERM security to the value and growth of pension-type investment assets IS a broad selection of the total equity-investment-universe, with allocations to different segments of that universe, and based on many factors for the pension fund itself and factors such as age and years-to-retirement for the individual; where the individual can afford to take greater risk in earlier years but the closer one gets to retirement the more one must protect more of the value built already over the prior years.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.