On 2009-03-14, GeoLane at PTD dot NET GeoLane wrote:
On Fri, 13 Mar 2009 19:03:00 -0500, Ignoramus32252
wrote:
S&P 500 in 1966: 93.3
S&P 500 in 2009: 756
CPI Deflator in 1966: 31
CPI Deflator in 2009: 211
S&P 500 annualized capital gain in the last 43 years, inflation adjusted: 0.44% per year.
Iggy. Was '66 a down or up year for the Index? That is are we
comparing two bottoms or a top value to a bottom value?
Is there a better place to put savings where it will beat inflation?
Well, S&P did beat inflation very handily, it did not lose value from
1966 until now, and paid decent dividends (that you would pay some
taxes on) during all this time. Your capital would be devastated if
you kept it from 1996 until now in a bank account.
But the return was not nearly as stellar as some rah-rah books might
make us believe.
For anybody above the lowest tax bracket, stocks are a better place to
save than a savings account for tax reasons alone since stocks are
taxed at a lower rate than dividends in order to encourage people to
invest in our companies.
You mean, dividends are taxed at lower rate than interest income,
right?
It is true now, but I think that it was not the case in the past.
Anyway, I think that despite the not so stellar return from 1966 to
now, an investor can do much better than that by buying low and
selling high, for example I think that now is "low" and whenever the
stocks get too expensive it is high. A good sign of them getting too
expensive is abundance of speculative IPOs of dubious quality. I do
not know of a good sign of prices being very low. Just a big decline
is not necessarily enough.
The difficulty with this approach is that when you buy low, you can
never time the bottom, and the times are scary (like now), and when
you sell due to prices becoming too high, you can miss a lot of
upwards action.
So if you buy, say, now, the market could go even lower and make you
feel bad.
--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/