Performance By Asset Class

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Index Funds and Fund Managers

Cartoon: Investing and Stress

S and P 500: The Lost Decade

We're now over eleven years beyond the S&P 500 2000 high. This little charting exercise gives credence to the frequent reference to a "lost decade" for investors. In nominal terms, the index is about 6.8 percent below where it was at the 2000 peak, but in real terms, it's a disappointing 29.5 percent off the original investment. The chart also offers support for the wisdom of diversification across asset classes ... and perhaps the value of active management during secular bear markets.

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Investor Sentiment

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Cartoon: Common Stockholder

Investing Choices

Investing Advice

The Mogambo Guru writes:

But, back to business, I gently remind you to buy gold, silver and oil stocks against the idiocy of your government deficit-spending so much money and the inflationary calamity of the Federal Reserve creating the money.

And if you don’t buy gold, silver and oil after I gently reminded you, then I will not so gently remind you that you are an idiot! You are worse than an idiot! You are a lowlife imbecile! And you will grow old and die in penniless misery because you act like an idiot, and your children will curse you for being so stupid as to not buy gold, silver and oil when it was obviously the correct thing to do, and they will drive you from their doors when you beg for crusts of bread.

So, think about it; gold, silver and oil, or begging for crumbs from your own children who hate your guts. Seems like a no-brainer to me! Whee!

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S & P 500 P/E Ratios

Interestingly, in 1981 the stock market was in a kind of a funk and the Price/Earnings ratio was hitting about 7, which is on the low side, whereupon (thanks to Congress authorizing tax-deferred retirement accounts in 1982) the stock market proceeded for the next 20 years or so, in fits and starts, to rise to, stunningly, a P/E ratio of almost 30 in 2000, whereupon it promptly turned over and has been falling, in fits and starts, for the last 10 years as the price of the S&P went down. Wow! What a ride!...

I say this because the historical record is crystal-clear: When the P/E ratio goes above 22 or so, it won’t be long until the price of the stock falls enough so that the Price/Earnings ratio is back down in the upper teens in a bull market, and back down to around 5 in a severe bear market, whereupon it won’t be long until the price rises again on its way to “overvalued” status. That’s the nature of cycles...

And, with special emphasis to in-laws everywhere, anyone buying a broad basket of common stocks and bonds, but not buying gold, silver and oil to protect themselves against the roaring inflation in consumer prices that will result from an idiot Federal Reserve creating massive amounts of money so that the government can deficit-spend those massive amounts of money, is a moron.

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Cartoon: Investing

Cartoon: Investing

Stock Market: Good Year, Bad Decade

For the year:

Dow 18%
S&P500 23.5%
Nasdaq Comp 44%

For the Decade:

Dow -8.34%
S&P500 -0.9%
Nasdaq Comp -44.2%

“It’s been a decade of delusion,” said Richard Tedlow, professor of business administration of Harvard Business School in Cambridge, Massachusetts. “In many ways, we’re worse off than the 1930s, we’ve created problems of moral hazard and we’re faced with an astounding public debt.”

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Gold: The Trade of the Decade

“A $100 investment in gold would now be more than $380,” Bloomberg calculates, “while the same sum in commodities would have grown to about $357, according to the Standard & Poor’s GSCI Enhanced Total Return Index.”

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Cartoon: 401k Statements

Basics of Investing from Jim Rogers

1. Buying things that are cheap; and
2. Buying things that are about to see a dynamic change in their favor.

Put those principles together and you’ll succeed as an investor by buying assets that are out-of-favor -- just before they come back in favor.

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Cartoon: Bank Nationalization

Cartoon: Investor

Cartoon: Investing

Cartoon: Shrinking Nest Egg

Cartoon: Investing