Dow Soars to New Closing High of 11,727

[sirs]

Now, try applying your $1000 invested 20years ago.

If you stayed indexed, it would be worth $6,744.74.
However, that is not accurate, because it doesn't include reinvested dividends, stock splits, etc.
I have a friend that invested $10,000 in the stock market 20 years ago. He has a monthly income of $6,000 now, and is retired at 50.

So Lanya, what's your response to this bit of unsavory news?

[sirs]

You have no thoughts about this, Lanya?

 

[sirs]

Interesting.  I see Lanya online.  She's posted on this thread before.  When a thread is posted on, it jumps up to the top.  We have a specific question posed for her.  And................?  Boy, I didn't realize this forum format was that difficult

[Lanya]

Sirs, I think that's wonderful.

Just think what it must look like to a young person starting out....wow, in 6 years, I could have made 34 cents!
The original post is what I'm referring to here. 

[Amianthus]

Just think what it must look like to a young person starting out....wow, in 6 years, I could have made 34 cents!

Only if they invest stupidly. I made between 12-16% each of those 6 years in the stock market.

And besides, the original post is wrong anyway. The Dow Jones yield for 2000 was 1.4% (the lowest ever for that index). So, in that one year alone an investment of $1000 would have earned $14.

You have to look at the yield, not a straight multiplication of the closing prices. There are dividends, stock splits, etc, all combining to make money.

[sirs]

Sirs, I think that's wonderful.

Well that's progress. 

Just think what it must look like to a young person starting out....wow, in 6 years, I could have made 34 cents!

And just think, if they had invested more wisely, those #'s would obviously be much greater.  And since this "young person" is obviously going to be smart and leave their money in the market for 20+ years, imagine the smile he and his family will have at the end of that time   

The original post is what I'm referring to here.

Oh I realize it was just a partisan jab at Bush, trying to demean the excellent economy news that's been spreading.  Too bad it's such a blatant distortion effort.  But I do thank you for finally responding.  It was very much appreciated

[Plane]

The smart way to invest is not to try to time the market at all.

Oh sure you can see how a well timed investment might make outlandish sums of money , but you can also see how a poorly timed investment will loose a lot.


If that guy had understood Dollar cost adverageing he would have invested $200 six years ago and it would have slid rapidly to the value of $150 or so , but then he would have bought $200 the following month and the next and the next and so on.

If he kept that up till now he would have made a good investment by buying the advradge price of stock inbetween that time and this , since there was a big dip early in this program he got a bargan buy at that time and whenever the stock market was high he naturally bought fewer stocks because he bought the same dollar value reguardless of the swing.

Dollar cost adveradgeing is a good simple way to make buying low automatic because when stocks are low you tend to buy more and when they are high you buy no more.

Selling can be done the same way , retireing people take note, when you retire you can cash it all in at a market high for a fantastic profit , or perhaps regret this when the market rises again, or you can sell a bit at a time selling at a rate intended to get you out of the stock market at about the time that you die.


 NO one knows exactly when they are going to die , butr actuarial tables can give you a good idea of what is likely , simularly no one knows the day to day direction of the market , but a study of trends can give one a good idea of what is likely.