X-Message-Number: 20434
Date: Tue, 12 Nov 2002 14:05:22 -0500 (EST)
From: Charles Platt <>
Subject: Stock Market Behavior

John de Rivaz suggests:

> So in 1990 someone could have bought approx $100k of insurance and paid for
> it by savings income from $40k. Instead he could have used the $40k to have
> bought stock exchange investments which even after the boom and bust would
> still be worth nearer $200k.

I've seen this kind of argument often. Certainly the DJIA has done well
over the years--but who owns stock in all the companies which constitute
the DJIA? I've never met anyone who follows this investment strategy. On
the other hand I know people who have suffered by investing in the wrong
mutual funds, and I know even more people who have done extremely well in
stocks over a short period, but have been wiped out in the long term. I
have one friend, who is extremely shrewd, but went from $500,000 to $500
during the past two years.

Certainly the market as a whole tends to increase in value over the
long term, but that doesn't mean your subset of it will.


Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=20434