For all of you bulls......

[rokid]

If you're a bull, you'll love these charts.

http://gummy-stuff.org/doom-gloom.htm

[Birchtree]

Rokid,

What will it take to make you a believer - Dow what number?

I remember all those years and the inside straights that went with the plays.

I'm in up to my eyeballs and I ain't being scared out - no fear.

Dennis - permabull #2

[Mike]

So if I read that right, we should expect a rough annualized return of 10-11% over the next 7 years from the S&P. That's decent but not exactly mind-blowing (and not much of a departure from the average stock market return over the past 75 years). :p

[rokid]

So if I read that right, we should expect a rough annualized return of 10-11% over the next 7 years from the S&P. That's decent but not exactly mind-blowing (and not much of a departure from the average stock market return over the past 75 years). :p

Mike - My take was that looks '00-05 looks just like '73-78 . After 1978 the market took off. So....
Since I've been reading predictions of 6-7% for the rest of this decade, another run like '82-99 looks great! However, I'd also take 10-11% a year for the next seven.

Birch - I just started reading Jeremy Siegel's new book, "The Future for Investors". He argues that indexing the S&P 500 provides suboptimal returns because new, fast growing, and over priced companies, e.g. Yahoo!, are continually being added to it. Since these companies have such high valuations (in Yahoo!'s case it was once valued at 500 times earnings!), the returns from an S&P 500 index fund are less than those that result from buying and holding, and reinvesting the dividends of, a diversified group of low P/E S&P 500 companies.

Value investing! Away from Bogle and back to Graham and Buffet!

[Mike]

So are you advocating investment in a "large cap value" fund rather than an S&P index fund?

[rokid]

So are you advocating investment in a "large cap value" fund rather than an S&P index fund?

Mike - No, I'm not. However, you might interpret Prof. Siegel in that way. I just mentioned the book because I thought it was interesting. Conventional wisdom advocates holding a significant portion of your portfolio in a large cap index fund. In addition, since Birch is such a big advocate of the C Fund and expects it to be the next top performer, I thought he might also find Siegel's theory interesting.

Philosophically, I'm an efficient market advocate, i.e. hold the global market. Unfortunately, TSP doesn't provide an emerging markets fund or an international bond fund.

However, I violate my own philosophy by holding a significant amount of my portfolio in FLPSX. Its manager, Joel Tillinghast, invests what appear to be small and mid cap value stocks. Although it is actively managed, its return is so high and its risk so low, it's hard to ignore. In addition, FLPSX non-correlates with the rest of my portfolio. Consequently, it is a great diversifier.

[Mike]

Nice fund (5 stars). Their expense ratio is almost 1% (blah), but it's hard to argue with the results: -6% = worst annual return (when the overall market did far worse), while +46% = best annual return.

A significant portion of their holdings are now in defensive sectors (financials + healthcare), so it looks like they expect a bit of an economic slowdown, too.