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Is the Dow's 2010 Performance a Surprise?
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Posts: 25
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I noted over the New Year's weekend a number of news outlets reported the Dow's 11 percent gain in 2010 as if it was a big surprise that the stock market could and would rebound after the events of late 2008. Why is it that the media is shocked time and time again when the market drops, then recovers? They'd do well to look at the market's long-term history. Here's an interesting article on the topic from The Detroit Free Press, Jan. 1, 2011, written by columnist Susan Tompor. www.freep.com/article/20110101/COL07/101010318/Money-made-in-stocks-in-2010
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Rank: Advanced Member
Posts: 16
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The quote below is taken from the Detroit Free Press article Amy referenced, and boy is it ever true.
"Investors need to stick with a disciplined investment approach," Ruth said.
For example, according to a Dalbar survey, from 1988-2008 the S&P 500 returned 8.35%. During the same period the average equity investor had a return of only 1.87%. In the meantime inflation was 2.87%, meaning the average equity investor's buying power decreased during the period. Why? The tragic truth is they bought high and sold low. They followed the lemmings, selling at the bottom and buying at the top of each cycle.
A disciplined approach is critical to investing. Buy quality companies and stick with them while paying little attention to what the "market" is doing. Only sell when the company itself is showing a decline in it's value and look at market declines as buying opportunities.
Bob
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Rank: Advanced Member
Posts: 262
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It was some general, I don't remember who, but he said " If you deviate from a a plan you don't have a plan". This could very well apply to investing. I think there will always be periods where the data collectors can finds periods where people have had extraordinary gains and periods of no gains. That way you can play into the greed, and fear camps. You'll always have an audience.
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Is the Dow's 2010 Performance a Surprise?
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