Surviving the market CNBC
- Thread starter NKNY
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http://www.monoclesystems.com/Advisors/monoclesystems/default.asp
I saw the broadcast. Mighty active for his age!!!
Don't know anything about the software. If it does stocks or indexes let me know.
Good Luck
I saw the broadcast. Mighty active for his age!!!
Don't know anything about the software. If it does stocks or indexes let me know.
Good Luck
When they did the "idiot on the street" interviews about Dow 36,000, there was a consistent theme of people who used the notion that stocks return 10-12% a year, as if is some sort of guarantee. One person who emailed power lunch used a "conservative" 9% a year.
12% a year? What a joke. Those numbers are such propaganda, yet they are accepted as absolute truth.
12% a year? What a joke. Those numbers are such propaganda, yet they are accepted as absolute truth.
Whole series was stupid. They had this lady who lost all her money b/c she was on margin. Thing is she left a well paid job to daytrade. Why do they keep having these idiots on TV who can't cut it? Why don't they instead of putting fund managers on who are down 30% for advice, they put on some of the people who are up 100%+ already this year. I'd sure rather hear from them.
p2, I think this is a decision made high up on the network. Only a sliver of CNBC viewers cheers when they interview Fleckenstein, Greenberg or David Tice. People who have lost more than half of their life savings because they bought and held do NOT want to hear that there are others who are making out like bandits.
In a twisted way, they feel good when they hear stories that mirror their own lives because then they can say: "See, it wasn't me! Everyone was taken in. It was _______ "(filling in the blank with whatever excuse they want).
CNBC is just pandering to their customers. Just like they were when they waved the pom-poms during the bull market.
In a twisted way, they feel good when they hear stories that mirror their own lives because then they can say: "See, it wasn't me! Everyone was taken in. It was _______ "(filling in the blank with whatever excuse they want).
CNBC is just pandering to their customers. Just like they were when they waved the pom-poms during the bull market.
Babak, you hit the nail on the head...It's the "moral high road" to be invested on the long side and to be grieving over your losses...The majority needs to hear that this is the only way to make money and that there are no alternatives in order to preserve their sense of well being...I think it was pretty ridiculous as well that people were talking DOW 36,000 considering the dose of reality they have witnessed in the last two years...Its also amazing people talk about 9-12%...I bet these pension plans wish they could even adjust their assumptions to 2%, cause even at 7% they are so underfunded they are going to be dipping into their piggy bank for years to come just to pay out the retirees and futures beneficiaries...
Wanna see something really scary?
Bogle has this model that gives uncanny predictions of the average annual return for the next 10 years. He started using it in 1957 and since then it has a high correlation to the real thing. I read about it in Boucher's "Hedge Fund Edge" book:
" Working with figures from the mid-1997, we can use this highly accurate model to predict the average annual return of the S&P over the next 10 years. Thus for 1997 to 2006 we take the S&P dividend yield of 1.65%, add the 6.5% average annual earnings growth, and then subtract 3.5% for the annual rate required to take the 23 PE down to the average PE over the next 10 years -- to get an estimated average annual return of 4.6% for the S&P from 1997 to 2006.
Remember, that is using data from 1997! I wonder what it would be like if we plugged in the negative earnings growth (some of it was vapour!) and the high relative PE (still!)? We would probably come to something hovering around zero or even negative. Then take into consideration inflation...
In case anyone wants to do the number crunching here is the formula:
1]dividend yield at the beginning of projected decade
2]the avg annual earnings growth for the past 30 years
3]take the avg PE over the past 30 years and compute RoR (+/-) that would have to develop over the next 10 years to achieve that average PE at the end of the term
4]add 'em all up!
Bogle has this model that gives uncanny predictions of the average annual return for the next 10 years. He started using it in 1957 and since then it has a high correlation to the real thing. I read about it in Boucher's "Hedge Fund Edge" book:
" Working with figures from the mid-1997, we can use this highly accurate model to predict the average annual return of the S&P over the next 10 years. Thus for 1997 to 2006 we take the S&P dividend yield of 1.65%, add the 6.5% average annual earnings growth, and then subtract 3.5% for the annual rate required to take the 23 PE down to the average PE over the next 10 years -- to get an estimated average annual return of 4.6% for the S&P from 1997 to 2006.
Remember, that is using data from 1997! I wonder what it would be like if we plugged in the negative earnings growth (some of it was vapour!) and the high relative PE (still!)? We would probably come to something hovering around zero or even negative. Then take into consideration inflation...
In case anyone wants to do the number crunching here is the formula:
1]dividend yield at the beginning of projected decade
2]the avg annual earnings growth for the past 30 years
3]take the avg PE over the past 30 years and compute RoR (+/-) that would have to develop over the next 10 years to achieve that average PE at the end of the term
4]add 'em all up!
I have to say that was the most pathetic story I have ever seen on CNBC. The worst part is people who have lost everything could not even relate, because at the end of the story her buddy talks about her jet setting ways and they show her shopping for shoes. Nobody wants to hear how some rich chick lost her money and is now living on Daddy's dime.
