Anyone scared about the economic crisis?

[lookout123]

Oh, you're back to talk about investments again?

[tw]

In May 2004, these same investment concepts were discussed. Two posts that discucss how to invest were Portfolio 101 and Portfolio 101 [quote]Market professionals are too buy selling themselves rather than learning what really makes a good investment. There is great profit in selling themselves because so many laymen think you must be an economist or some kind of professional investor to invest in stocks. ... Listen to what he says. If he hypes cyclic trends and capital expenditures, then run. However if he talks about the company product and industry trends, then put his stock in your basket of 'stocks to watch'. ...
In May 2004, these same investment concepts were discussed. Two posts that discucss how to invest were Portfolio 101 and Portfolio 101

Market professionals are too buy selling themselves rather than learning what really makes a good investment. There is great profit in selling themselves because so many laymen think you must be an economist or some kind of professional investor to invest in stocks. ... Listen to what he says. If he hypes cyclic trends and capital expenditures, then run. However if he talks about the company product and industry trends, then put his stock in your basket of 'stocks to watch'. ...
There is nothing fancy about stock investment except by understanding the only reason for growth - the product and its markets. Don't let the market liars have you think that investment is only for professionals. Again, the market experts average underperform the markets. Product is why Peter Lynch and Warren Buffet were such good investors.

As usual, the emotional make claims without even stating a single reason why:

Originally Posted by depmats

tw - you have your head so far up your ass on this one that i don't even know where to start.

and

Originally Posted by sycamore

Tear his arguments apart then.

How do we know both have not a clue? Both would attack the messenger AND both would not provide a single useful fact. How curious. Extremists also do this.

Well let's see what happened to Onyxcougars investments.

Initially were investments in Dodge & Cox Stock Fund (DODGX) and Dodge & Cox Income Fund (DODIX). Apparently after professional advise from elsewhere, the Stock Fund was eliminated. Added were
Dodge & Cox Income (DODIX)
Vanguard Morgan Growth (VMRGX)
Vanguard Wellington (VWELX)
Vanguard Total Stock Index (VTSMX)

The eliminated Stock Fund outperformed the market over four years. But all non-indexed funds in the new portfolio, except one, underperformed the market constantly over those same four years. The only index fund (fourth down) outperformed the market. Eliminate the index fund and the entire portfolio of professionally managed funds is tragic.

Blue line is each fund over the past four years; red line is the Dow Jones Industrial Average. Below are DODIX, VMRGX, VWELX, and the index fund VTSMX:

[tw]

UT selected a fund apparently using Vanguard's fund picker (not using professional advise).

Originally Posted by Undertoad

Personally I would be more in the growth fund - and I am (my choice is VSEQX), even though I'm a little older than you.

Well UT outperformed the market; if he got out on or before the end of last year.

Unfortunately, if UT did not get out last year, then he underperformed the market AND lost all four years of profits. Had he invested in a DJIA or an S&P500 index fund (funds without experts selecting the investements), then UT would have outperformed the Vanguard Strategic Equity fund. His investment was no better than an index fund starting Jan 2007 and then became worse than an index fund on Thanksgiving 2007.

Again, the chart is the past four years with VT's fund in blue and the DJIA in red.

[tw]

In that same discussion were a cross section of stocks:
Microsoft (MSFT)
Intel (INTC)
Nokia (NOK)
Amazon (AMZN)
Adobe (ADBE)
Qualcomm (QCOM)
Cisco (CSCO)
Juniper Networks (JNPR)
Warren Buffet's Berkshire Hathaway (BRKA)

As Peter Lynch noted, most will mimic the market, one may be a dog, and one will be so good as to make the entire portfolio profitable. Observe with care. For example Intel (second down) looks like a large loss. But it is only 20% down. Next stock, Nokia, looks like a small gain but is really 50% up.

This 'basket of stocks' duplicates what Peter Lynch stated and demonstrates how a simple cross section of stock typically outperforms professionally managed mutual funds. Notice the performance of Nokia, Amazon, Adobe, and Qualcomm (until it started losing lawsuites). Even the legendary Berkshire Hathaway is only an average performer in this portfolio posted four years ago but better than the non-indexed mutual funds.

Meanwhile, why would anyone even waste one dollar on a lottery ticket? Why would anyone invest in a losers proposition?

Blue is each stock as posted four years ago; red is the DJIA: