Finally, somebody asks, "how long is too long to wait for stock markets to recover?"

[mistertrickster]

They said shares were for the long term - not for long-term losses
As market logic is confounded, Richard Northedge asks how investors should react to the prolonged wait for a profit and fund managers give their recommendations

Sunday, 20 July 2008

Those who bought shares last year won't be surprised, amid the economic turmoil, to find they have lost money on paper. But now even people who invested in the stock market a decade ago are looking at a loss. The investment optimists insist equities always come right in the long run, but when shares are below water after 10 years, how long does long have to be?

Most people who bought an individual savings account, contributed to their pension fund or purchased shares directly in 1998 have made no money at all on their investment. And the pain will continue into the next decade unless the bear market turns sharply into a new bull run – and no one is forecasting that. Even if share prices were to fall no further, they would still not be showing any capital gain by the time the Olympics open in London in 2012.

Bob Yerbury, chief executive of fund manager Invesco Perpetual, concedes: "We think about long-term normally being three to five years. Ten years is a long time not to make a profit."

The last time the stock market failed to show any gain over a decade was when the 1974 crash left shares below 1960s levels and prompted small shareholders to abandon direct equity investment.

More at
http://www.independent.co.uk/news/business/analysis-and-features/they-said-shares-were-for-the-long-term--not-for-longterm-losses-872155.html?service=Print

[aspergris]

1. There has NEVER

Been a 20 yr period in the history of t he US stock market, to include the great depression, where dollar cost averaging over that period didn;t realize solid gains.

any retail (lay) investor who is FULLY invested (100% stocks) "for the longterm" should have a 20 yr time frame.

"Most people who bought an individual savings account, contributed to their pension fund or purchased shares directly in 1998 have made no money at all on their investment. "

well, duh. MOST PEOPLE shouldn't go all in (that's what traders do. and I'm a trader) at any point, but should dollar cost average.

[mistertrickster]

3. Good point. Dollar-cost-averaging does make a difference.

That's what I'm doing. And 20 years is my timeframe.

[Hydra]

2. Heh

Market confidence slipping. Not a good sign for gaining casual investors.

"When will I see a profit?"

"Maybe never"

"What's my incentive?"

[tridim]

5. "How do I know if this company I'm investing in is not run exactly like Enron?"

"You don't."

That's the main reason I'm not invested in the market. I don't trust corporations to regulate themselves, and no, hand slaps as punishment for massive fraud isn't regulation.

[Hydra]

7. Exactly

I've seen enough companies do this, so this seems to be the accepted model:

Company created
High investment/high return(if it doesn't fizzle out)
Progress into new market meteoric for 3 or so years
Company tops out
Company crashes and burns when their accounting cookbooking revealed or CEO and buddies cut and run
Company gone forever, most of the people who were on the inside start a new project or jump on somewhere else.

Rinse and repeat.

[mistertrickster]

6. Just think if Bush had succeeded in selling out Social Security to

"piratization." Then millons of retirees could see their certain SS check wither to no returns in the market . . .

[Hydra]

8. I think that was the plan

2 trillion dollars dumped on the market for Bushco to extract "right before the crash."

That's one of the few things he never got...but it's still there for the picking if we aren't careful.

[screembloodymurder]

4. Great and very important question.

Considering the Right thinks they should dictate how the underprivileged (a.k.a. working class) invest their money for retirement, I'd like McSame to give us an answer. Mr. McSame, if we go to a stock market based S.S. savings plan and we lose money, will the government bail us out? You know, like you bail out your banking friends.

[maui9002]

9. So the author would recommend putting your savings in?

Real estate? (not looking too good today--unless you have extra funds to be a buyer in this market, but most investors don't have the funds necessary to invest in much more than their own home and possibly a second/vacation home).

CDs? (currently 3% to 4% except for very long term CDs and make sure you don't have > $100K invested in one FDIC insured financial institution).

Savings accounts? (see CDs except lower rates).

Municipal bonds? (see CDs except lower rates although with tax advantages).

Gold/Silver/Precious Metals? (at historic highs but scary investments now--because what has gone up significantly in recent past generally is due to come down significantly in not too distant future).

Oil/natural gas? (Ok, but how do most average investors invest in oil and gas? Through stocks in oil and gas companies).

Simply put, it's ok to rip on the stock market now but given the lack of better financial options, a long term view, the benefits of dollar income averaging, and a firm belief that the economy (both domestically and internationally) will recover in the long term, I'm of the view that stocks are getting cheaper while I'm still a buyer through my retirement plan.

[mistertrickster]

10. I basically agree. But it's good to remember that when brokers talk about

"long term," it may be a helluva lot longer time frame than most people expect.