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Hawke[_2_]

Ignoramus29034 wrote:
On 2009-07-24, wrote:

I agree with most of what you say. However if you wait until
Christmas stocks may again be out performing bonds. In fact it could
be true today. I am just too lazy to find out. The collective value
of our society is indeed determined by what we produce. The money
going into Social Security does not produce anything now.

The money going into social security is used to pay old people
now. It is not an investment scheme, for the most part.

That said, I want to go back to my earlier statement about stocks
having UNDERrformed bonds for the last 5, 10, 15, and 20 years. I do
not want it to be misinterpreted as me talking down stocks. I never
believe in extrapolating past into the future, this usually does a
disservice to those doing this. The "stocks for the long run" crowd,
and "homes are going UP" crowd, had lost a lot of money because of
this unintelligent extrapolation. Extrapolating the recent losses into
the future is similarly a mistake. The future is much less knowable
than a trend suggests.

I think that this historic underperformance has created an environment
where the future is much better than the recent past. Stock prices
being in a downward trend and having become cheap, tell us the
opposite -- that they are sufficiently attractive now to be much more
interesting that short term cash or "safe" bonds. I can expound on
this if anyone is interested, which is doubtful.

Without counting the value of our house, I am about 90% in various
stocks as of now, I moved our money into stocks over the last fall
through March. I have no short term forecasts on anything, but I am
more comfortable with what I hold, long term, than with cash.

I have no crystal ball telling me what will happen in a mohth or a
year, but I try to avoid doing dumb things as much as I can. I do not
always succeed at this, but my brokerage account outperformed S&P 500
by 4.09% per annum, not counting the effects of taxes, and my IRA by
7.51%, for the last 6 years since 2003. This is not because I am very
smart or a good investor, but I did avoid some some dumb things that
dragged averages down.

i

I don't know who is giving you investment advice but by conventional
standards you should be a man in your twenties if you have 90% of your
money invested in stocks. If you are near 60 you are way over invested
in stocks. The older you get the more your portfolio should be weighted
in favor of bonds. 90% investment in stocks is very risky and therefore
you should be getting a very high return if you're not losing money.
People at retirement age or older should be 60% to 80% or even higher in
bonds. Your 90% strategy is a very high risk one. I'm wondering who told
you to invest so heavily in stocks. That is not what a responsible
broker would advise his clients to do. I'm just asking, is the 90% stock
investment strategy one you came up with or did a professional suggest
that? Your age is a major determinant of the percentage of stocks and
bonds you hold in your portfolio. So are you closer to 20 or 60?

Hawke