"Savings accounts are stupid! They offer fractions of percent interest. Look at exchange-traded funds that track an index such as the S&P 500 or Nasdaq Composite. My personal favorite ETFs ... (and on and on)"
If you had had your savings in the market in 2008 and didn't sell it, it would still be worth more now. Moreover if you were investing regularly then you would have been buying the super cheap stocks available in 2009.
Mid 30's. Also you really don't know what you are talking about. If you bought nearly anything after Nov 21st 2008 and held, you'd be way in the green since then.
Let me give you a even more conservative example. SPY which tracks the S&P and it is very conservative (in terms of stocks), is up 151% since Nov 21st 2008 way above pre-2008 levels. Not to mention all those beautiful dividend payments you received.
> If you bought nearly anything after Nov 21st 2008 and held, you'd be way in the green since then.
You can always pick a crisis, and say that hold equity after crisis or before crisis, and wait for years, everything is green. Just pick a correct time period. The chart is obvious to naked eye, and an elementary schooler can make that argument correctly.
You ignored the fact that who caused the crisis and who are hurt the most. Whatever you said is an camouflage over a much more profound issue.
The fact that less rich or powerful can still grow matters much less than the relative ratio and wealth and power distribution.
The fact is obviously that the world's current market structure make rich become richer, powerful become more powerful. And let's pray that does not eventual causes society and economy breakdown.
"Also you really don't know what you are talking about."
Savings account (and other) rates are not low like they are because of chance or happenstance or a computer bug ... they are that low for a reason.
People are terrified. Smart, big money is terrified. Policymakers (at least thoughtful, informed ones) are terrified.
Nobody has any idea how all of this turns out. The 8 year melt-up in stocks is the result of hot, hot money dancing in and out of the market, desperately trying to eke out a return - all the while knowing that there will be a terrible, desperate scramble for seats when the music stops.
In your model of the markets that you are sketching out for us ... who is the sucker ? Who is it ? Not quite sure ?
"Also you really don't know what you are talking about. If you bought nearly anything after Nov 21st 2008 and held, you'd be way in the green since then."
Apparently it's likely you who 'doesn't know what he is talking about' given that you displayed as much to us in your rebuttal. ---> Stating that 'the market is up' since a historical low is more than meaningless. You should know that if you're offering advice on stocks via a blog.
I believe that a retail trader can 'make money' on ETrade about as much as the average joe (or even intelligent joe) can beat Deep Blue at chess - which is not.
This is not some deep insight, it's fairly well known.
Let's assume you bought SPY (very conservative ETF index) right before the crash at its high of 156.33 (Oct. 12th 2007 ). If you just held and did nothing, you'd be up a hefty 81%. This is not including dividends or even better a DRIP which would compound dividends and automatically bought more on the way down lowering your dollar cost average.
Funny how my evidence that directly refutes your claim is getting down-voted.
> I believe that a retail trader can 'make money' on ETrade about as much as the average joe (or even intelligent joe) can beat Deep Blue at chess - which is not.
If you bought at the worst time possible right before the crash and just held SPY, you'd be up 81% not including dividends. I'd say an "average joe" can manage that.
I think you make a good point, and I wish I'd taken advantage. My brother, who makes $12/hr, took his entire savings in March '09 and invested in commodities. He saw massive growth, while I bought toys and had fun. I made no money, and learned a good lesson.
Did you read their comment? He assumed you did the opposite of buying low: "Let's assume you bought SPY (very conservative ETF index) right before the crash at its high of 156.33 (Oct. 12th 2007)" Note the "at its high". Even if you miraculously had horrible luck and bought into an index at literally the worst possible time, you would have still made money.
This holds for practically any index out there. I personally hold VFINX. These are the returns for VFINX if you bought at the yearly highs and the yearly lows, per year:
2006 | 1.95x | 1.70x
2007 | 1.53x | 1.72x
2008 | 2.82x | 1.67x
2009 | 3.50x | 2.16x
2010 | 2.34x | 1.90x
2011 | 2.12x | 1.79x
2012 | 1.87x | 1.65x
2013 | 1.65x | 1.31x
2014 | 1.34x | 1.16x
2015 | 1.23x | 1.13x
2016 | 1.28x | 1.10x
2017 | 1.07x | 1.00x
That's right: the far column is the absolute worst case scenario, what would happen if you were miraculously horribly bad at choosing when to invest. Even in the worst case scenario, investing at the worst point in the worst year, $90 would have turned into $153. Investing at the best time would have given you $315! As long as you don't instantly sell the fund you'll come out on top.
This isn't rocket science, it's not some complicated stock pick, it's not hard to buy, and it's backed up by a hell of a history: index funds with low expenses give you a good return, no matter who you are. I know one person with $400 in VFINX and I know one person with several million in it.
And if you bought in 2007, before the recession, at the absolute worst possible time, you would still have nearly doubled your money in the last ten years - a 1.72x return.
Warren Buffet put a bet on this ten years ago, against a series of hedge funds, and as of now, with just months to go, he's winning. Not "winning against the worst", not "winning against the average"... the index fund - VFIAX (the Admiral class of VFINX) is beating every single fund handily, even though the bet started at a time advantageous to the hedge fund.
If you, or anyone else could, they would be Trillionaires.
By picking an arbitrary point in time - and comparing it to another arbitrary point in time (say, 'today'), you create a straw-man argument.
"Even if you miraculously had horrible luck and bought into an index at literally the worst possible time, you would have still made money."
Yes, stocks went from some low point, to a higher point today.
When you say 'this holds true for every index' - well, a broad ranges of indexes roughly encompasses the entire market.
Ergo - you're really just investing in the stock market, not indexes.
Unless you know something very specific about VFINX - and have research that other people do not have on the constituent companies, then you are just throwing darts at a wall. If you made money, great, if not, then it's the same thing.
What someone who doesn't have specific information is doing when they play the market willy nilly, is simply riding the overall market. And like other asset classes, it goes up and down.
There are historical averages for markets, and in the long run you can expect to earn just a little under that.
Interest rates are at an historic low, and we have bubble-like conditions in the market - if the Fed increases by a couple of basis points, much of that gain will go away.
Question. Be honest. How old were you in 2008 ?