I keep hearing this Bull shit that bonds out preform stocks, .
Which I believe is an utter fabrication and misrepresentation bordering on nonsense. No one who advocates owning stocks advocates owning all stocks, Pet Co does not equal Coke. Even if you don't pick individual stocks (and an argument can be made that you shouldn't) keep in mind that indexes are a selection of stocks. Stocks someone, who isn't a total tool, selected to represent a high performing bunch.
Lets say you bought the DJIA at it's high in 1900 and sold it at it's low point this in 2009 (because you have bad market timing) you'd yield a 14,431.81% increase (not including dividends). How about the S&P 500 at it's high in 88 until the recent crash? 203.45% increase (not including dividends). (Stockcharts.com). The article is a total fabrication; it fails to define what "relative performance" means and doesn't indicate where this guy is getting his data. But by using his data, he shows you get a 150% increase in over 200 years verses my FOURTEEN THOUSAND PERCENT in half that time (not including dividends)? Or 133% greater returns in 1/4th the time (200% in 49 years vs 150% in 200), and Bonds out pace stocks? How is this even on the table anymore?
Although bonds should be ~10 to 15% of your portfolio as you approach retirement since you'll need money and taking it out of stocks on a down turn is almost as silly as putting all your money in bonds. And without question for a few months a decade bonds most certainly outperform stocks.
Also, just because this article was written with statistical theater, I'll throw some in too:
14.4k% represents a 9,621.21% greater performance in 100 years than 150% does in 200 years. It's a trick that works better with smaller numbers due to the nature of math, you talk about the percent difference instead of the actual percent change.
For example during the down turn my faux bond portfolio was returning 3% to 7% while my faux index portfolio was returning -20% to -10% and my actual portfolio was returning -10% to 2%. Now that we're in an alleged recovery those numbers are: 3.37%, 5.39%, and 9.32% respectively.
So if my bonds are baseline then here is the "relative performance data" for my stock portfolios (how much better my stocks are doing):
Index 159.94%
Stocks 276.56% or 172.91% better than the index
As you can see in this way a very small percent difference (representing less than 10k in my case) in performance might lead you to believe, if I chose to spin it so, that my stock picks are insanely better than the index or the bonds. And that's a true argument, but a more true argument is that the difference is slight and my stock picks simply better than the other options by an amount that is less than the margin for error and then some.
update 1/5/2011
Good ideas: 6.19% (My Actively managed current holdings)
Indexes: 15.19% (By whenever, Hold forever)
Bonds: 1.54% (Bond indexes)
Which I believe is an utter fabrication and misrepresentation bordering on nonsense. No one who advocates owning stocks advocates owning all stocks, Pet Co does not equal Coke. Even if you don't pick individual stocks (and an argument can be made that you shouldn't) keep in mind that indexes are a selection of stocks. Stocks someone, who isn't a total tool, selected to represent a high performing bunch.
Lets say you bought the DJIA at it's high in 1900 and sold it at it's low point this in 2009 (because you have bad market timing) you'd yield a 14,431.81% increase (not including dividends). How about the S&P 500 at it's high in 88 until the recent crash? 203.45% increase (not including dividends). (Stockcharts.com). The article is a total fabrication; it fails to define what "relative performance" means and doesn't indicate where this guy is getting his data. But by using his data, he shows you get a 150% increase in over 200 years verses my FOURTEEN THOUSAND PERCENT in half that time (not including dividends)? Or 133% greater returns in 1/4th the time (200% in 49 years vs 150% in 200), and Bonds out pace stocks? How is this even on the table anymore?
Although bonds should be ~10 to 15% of your portfolio as you approach retirement since you'll need money and taking it out of stocks on a down turn is almost as silly as putting all your money in bonds. And without question for a few months a decade bonds most certainly outperform stocks.
Also, just because this article was written with statistical theater, I'll throw some in too:
14.4k% represents a 9,621.21% greater performance in 100 years than 150% does in 200 years. It's a trick that works better with smaller numbers due to the nature of math, you talk about the percent difference instead of the actual percent change.
For example during the down turn my faux bond portfolio was returning 3% to 7% while my faux index portfolio was returning -20% to -10% and my actual portfolio was returning -10% to 2%. Now that we're in an alleged recovery those numbers are: 3.37%, 5.39%, and 9.32% respectively.
So if my bonds are baseline then here is the "relative performance data" for my stock portfolios (how much better my stocks are doing):
Index 159.94%
Stocks 276.56% or 172.91% better than the index
As you can see in this way a very small percent difference (representing less than 10k in my case) in performance might lead you to believe, if I chose to spin it so, that my stock picks are insanely better than the index or the bonds. And that's a true argument, but a more true argument is that the difference is slight and my stock picks simply better than the other options by an amount that is less than the margin for error and then some.
update 1/5/2011
Good ideas: 6.19% (My Actively managed current holdings)
Indexes: 15.19% (By whenever, Hold forever)
Bonds: 1.54% (Bond indexes)
Comments
Post a Comment