Friday, July 25, 2008

Better than Average Returns - Grace Park

Yes, that is Grace Park from The Cleaner and Battlestar Galactica. I haven't watched The Cleaner, but now that I know, I went to the DirecTV website and remotely programmed my DVR to pick it up. Why not?  It has to be better than So You Think You Can Dance.

Anyways, market selling off a bit late in the day from earlier gains.  Normally, I'd expect the week after an options run to be a little weak.  And next week we will get the end-of-month boost from 401(k) money.  That's assuming folks are sticking with their dollar cost averaging.  Maybe folks have given up after 10 years of low stock returns.

You know, I was thinking about how the past 10 years has averaged just over 3% annualized.  Compare that to the period from 1982-1999 where the average was much higher.  When were folks much more excited about stocks?  At the tail end of the 1990's, as the days of double-digit average gains were going away.  Meanwhile, now that we have a decade of 3% gains in, folks aren't too excited about stocks.

Overall, the market may average around 8-10%.  But does it ever return 8-10% over an intermediate stretch of time?  Or, does the market have periods of 17% gains followed by periods of 3% gains?  If investors are excited or gloomy late in the cycles, wrong emotion at the wrong time, is it any wonder that people consistantly underpeform buying and holding the index?

Anyways, Grace Park plays Akani Cuesta in The Cleaner.  Want a video?

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