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 THE BASICS OF BUY-AND-HOLD Buy-and-hold is simply defined as buying a diversified portfolio of high-quality stocks, and/or a diversified group of mutual funds, and holding them for the long term—typically defined as 10 to 20 years or longer. This investing ... [full story]
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SECULAR BULL AND BEAR MARKETS Bull and bear markets occur not only over short time frames but also over long time frames. Refer to Table 1-8, which depicts two longterm (secular) bull and two long-term bear markets for the period ... [full story]
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Percent Gain After Bear Market The percentage gain after bear markets, can be substantial, as Table 1-7 illustrates. During the 2000–2002 bear market (not shown in the table) there have been at least five large rallies. Rallies have been persistent ... [full story]
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Bear Market Recoveries Table 1-6 provides data on how long it takes to break even, assuming a buy-and-hold approach with the S&P 500 Index, once a bear market has reached bottom. Also shown is the combined time of the drop ... [full story]
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Stock Market Performance over 102 Years How has the stock market performed over the last 102 years? To gain a perspective on the magnitude of bull and bear markets, consider Tables 1-4 and 1-5. This data was provided by the ... [full story]
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BULL AND BEAR MARKETS Looking back, individuals participated in a great bull run, if they were fully invested since 1982 or even since the end of 1990, or even since the beginning of 1995. From October 11, 1990 until January ... [full story]
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The stock market confounds most investors most of the time, and it will continue to do so in the future. That is because the markets are driven by investor psychology and perception of events. When good news comes out about ... [full story]
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STOCK RETURNS VARY BY DECADE Stock market returns are not consistent; in fact, they vary all over the map. That fact is what drives investors crazy. They never seem to know if they should be buying or selling. Listening to ... [full story]
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Business Week Forecasts Think about all the stock market experts’ market predictions you’ve read or heard about from 2000 through 2002. Ahandful of these characters have been let go or changed firms. Even well-known technicians do not have very good ... [full story]
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Market Seers Are an Embarrassing Lot If you ask five experts where to invest, there will be six answers; the five expert opinions, plus the right one. [full story]
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Investors Are Too Emotional and Overconfident The stock market is a very difficult place to make money. This is not a new thought. Over the past 100 years the stock market has been punctuated with sharp, uplifting bull markets, followed ... [full story]
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STOCK MARKET PERCEPTIONS In early 2000, investors had no idea that the next three years would be horrendous. Just look at the massive devastation inflicted on investors during the period, where over $8 trillion in market value was erased in ... [full story]
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A more recent investor survey was conducted by CNN/USA Today/Gallup Poll by telephone on July 29–31, 2002 of 1003 adults. Some of the key findings were as follows:2 ♦ 62 percent follow the stock market news closely. ♦ 66 percent ... [full story]
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Ownership in America, 2002,” was released in September 2002 by the Investment Company Institute (ICI) and the Securities Industry Association (SIA).1 The survey indicated that there were an estimated 52.7 million households (49.5 percent), or 84.3 million investors, who owned ... [full story]
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INVESTOR PROFILES AND CONCERNS Before diving into the intricacies of the stock market, including the occurrence of bull and bear markets, let’s first begin by observing a profile of the average U.S. stock investor based on two recently conducted surveys. ... [full story]
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STICK WITH THE FACTS In this book you will see facts, information, and ideas that you most likely have not seen elsewhere. You will see why the conventional wisdom on investing is dead wrong. Following bad advice can actually cause ... [full story]
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INVESTORS NEED AN ACTION PLAN Unfortunately, some investment firms do not provide fair and balanced information on investing. For example, I’ve come across some incomplete information in literature from Northwestern Mutual Financial Network, Merrill Lynch, Morgan Stanley, U.S. Global Investors, ... [full story]
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Most investors have a similar view of the investing scene. They hold the following beliefs: ♦ Buying a diversified basket of stocks and holding them for the long run is the best way to invest. ♦ They can perform better ... [full story]
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Dollar-cost averaging is another popular investing strategy bandied about in the canyons of Wall Street. Catherine Voss Sanders wrote an article entitled “The Plight of the Fickle Investor” in the Morningstar Investor (December 1997), and she stated: “Because emotions and ... [full story]
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Many investors, and especially those over age 55, who have less time to recoup their stock market losses than those in their twenties and thirties, may never recover the losses they suffered in the 2000–2002 bear market. Consider the following ... [full story]
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Future bear markets will arrive like clockwork, every three to four years, on average. Avoiding these slumps is the key to protecting your hard-earned capital. Unfortunately, most investors have no clue as to the market’s future direction, how the stock ... [full story]
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WHAT IS MARKET TIMING? Market timing can be defined as making investment buy and sell decisions using a mechanical trading strategy which employs one or more indicators and/or proven strategies. The objective of a successful market-timing system is to be ... [full story]
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Is there a smarter way to handle your investments, to protect your profits, and to steer clear of bear markets before they decimate your portfolio? Yes. The approach is called market timing, and it works, no matter what you’ve heard ... [full story]
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