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I’m Glad That This Week In The Stock Market Is Over

What a week we had in the stock market. On Monday the DOW fell 733 points to start off the week and dropped another 127 points on Friday to end the week. The good news is that the the Dow is up over 4% for the week. Go figure.
That’s right, some how the markets were up even with all that going on. This past week has shown us the intensity of volatility in the markets. I have to say that this was a great week for people who rode out this roller-coaster ride in one of two ways.
If you were one of the many that didn’t know what you should do with all the “The Sky is falling” news and figured that you don’t need any of your investment money. You decided to just let your money sit where it was at and ride it out. If you were properly diversified you most likely did pretty good. Most of the sector and different markets came out ahead for the week (Friday to Friday). Being diversified is what it’s all about if you want to stay afloat for the rough times so you can maximize your return over the long haul. I commend those of you that are prepared.
The other way is if you knew what you were doing throughout this period of six trading days and saw the writing on the wall each of those days and at different times of the day. You most likely made a killing. The volatility was off the scale. With days that had over 500 point swings, it was easy to be able to pick up some broken stocks (of not-broken companies) and watch as the investors got back into them after they were oversold. Waiting for those quick returns of 5-10% gains. In some cases, there were returns of 30% a better.
Throughout the week there was a lot of news as well as action to keep one busier more than one would care to be, but I found it very educational. I do have to say that I’m glad that it’s over.

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One Response to “I’m Glad That This Week In The Stock Market Is Over”

  1. Walter says:

    (Hardcover) Who better to make a sfraighttorward argument for the index mutual fund than the man who developed the first of its kind for Vanguard in 1975. The stock market offers the return of the businesses it represents to investors. These returns are not received, because rather than buying’ the market with a fund that tracks those returns, investors are sold actively managed funds that try to outperform the market and in the end dilute those returns with crippling fees and costs from excessive trading. The argument has been made by other distinguished writers in recent years, but investors will find this industry giant’s take on the matter forceful.What’s new is Bogle’s sobering expectations for future market returns. Over the past century companies have produced a 4.5% dividend yield and a 5% earnings growth rate (9.5%) for investors before actively managed fund costs have stripped away much of that wealth. Today dividend yields on equities are under 2%. Earnings growth rates in the future may or may not be lower than the historical average. What seems apparent is that investors are less willing to pay for those earnings than they have in the past as measured by a decline in price earnings ratios. Bottom line: we may be looking at a period of market returns of just 7-8%, and after all the intermediary costs of the mutual fund industry, investors will see that return dramatically reduced. This is why costs matter. The index mutual fund is the least expensive way to get the market’s return into your pocket. Unfortunately, many 401 (k) retirement plans do not include some of the key U.S. and international indexes recommended by Bogle.Bogle’s view of the flood of ETFs (exchange traded funds) that slice and dice markets into specialized sectors is that they have only increased risk with the illusion that they have diversified it away. They are a wolf-in-sheep’s clothing . That they can be so actively traded (long and short) defeats the underlying idea of owning the market for its long-term gains. Ultimately ETFs fail to offer the quintessential promise of a total stock market index fund to earn [a] fair share of the stock market’s returns . He sarcastically suggests they carry warning labels. Industry insiders will sit-up at Bogle’s swipe at noted Wharton professor, Jeremy J. Siegel (author of the widely admired, STOCKS FOR THE LONG RUN). Recently Siegel has helped promote a family of ETF securities that shift the composition of the underlying indexes from a traditional capitalization weighted model to one that emphasizes dividends. For Bogle, these are siren songs based on data mined ideas that my or may not work in the future.

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