Comments on: 82 Years Is Not Enough

By: mlgreen8753

mlgreen8753 — Sun, 13 Sep 2009 04:26:35 +0000

Investing in the stock market is a gamble, but then again, so is entrusting your future entirely on an employer. Although I don't recommend a person squandering their life savings in stock, I do recommend they invest a reasonable percentage in some type of investment. I dabble in business, real estate, and yes stocks are something I am looking at now. In fact, I am seriously looking at stock in Mentor Capital (MNTR), because of their 20% interest in a biotech company working on FDA clinical trials for a breast cancer treatment that exposes cancer cells enabling the immune system to fight the disease more effectively. I believe the stock value will go up if this treatment makes it to the market. Financial statements made on www.BreastCancerInvesting.com make this investment very appealing.

By: mlgreen8753

mlgreen8753 — Sat, 12 Sep 2009 21:26:35 +0000

By: Risk in the Real World: When Investors and Investments Collide

Risk in the Real World: When Investors and Investments Collide — Tue, 08 Sep 2009 17:32:22 +0000

[...] course you are limited by the fact that you rarely have more than a few decades of data to measure, and that with so little data it quickly becomes obvious that there is nothing standard about the [...]

By: New Jersey CFO » The September effect as a Rorschach test

New Jersey CFO » The September effect as a Rorschach test — Thu, 03 Sep 2009 13:03:51 +0000

[...] data to make meaningful statements about relative monthly performance. Carl Richards at behavior gap notes that our stock data really is insufficient to really say much about the equity risk premium. [...]

By: The September effect as a Rorschach test Abnormal Returns

The September effect as a Rorschach test Abnormal Returns — Thu, 03 Sep 2009 02:44:16 +0000

By: Paul_Meloan

Paul_Meloan — Wed, 02 Sep 2009 14:20:04 +0000

All gambling is based in denial. What makes it enticing is that the negative expected return is offset by huge variance, thus even the suckers can win some of the time. The recreational gambler on a weekend in Vegas accepts this as the charge for his entertainment. The degenerate gambler has a pathological need for the action.

Wall Street is equipped to accommodate them both, but unlike Vegas offers an alternative course for those who are patient and disciplined enough to accept market returns over any given period of time. As is discussed quite well here, there is no guarantee it is going to work for you, for me, or anyone else. But the potential is real and the chances are favorable because capitalism, for all its problems, really tends to work out over time. Enterprises that create wealth through the provision of valuable goods and services offer a positive expected return on their capital.

Just as the last decade of zero risk premium should not convince anyone that equities are a sure thing over long periods, it also does not convince me that the premium is gone forever (now that's a LONG time!).

Cheers, Paul Meloan

By: Alan S - London UK

Alan S - London UK — Wed, 02 Sep 2009 13:11:56 +0000

I disagre that we only have 82 years worth of data – yes if we are only considering established stock markets and exchanges – however date can be traced back over centuries in terms of merchantsinvesting in a project (business) and thereby takin risk in anticipation od a share of the proceeds – eg merchant ships over the last 5 centuries – or rice farmers in ancient Japan – the same principals of ris/reward apply as the investor had the alternative of keeping his fortune, buying gold, or land but chose to allocate to a business venture in expectaion of a return ahead of 'safer' assets.

By: MarkWolfinger

MarkWolfinger — Wed, 02 Sep 2009 01:11:39 +0000

Hi Paul,

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Resolve beats panic by a ton. But, is that the best an investor has the right to demand? A positive expected return is necessary before I invest, but what happens when that expected return fails to materialize. How do investors handle their n=1 retirement years? Poverty is not the answer.

Shouldn't an investor have the right to demand that his/her investments be guaranteed not to decrease in value by more than, say, 10% in any given year? I know that I demand that right. Whether I, or any investor, chooses to exercise that right is a personal decision. Some will take that guarantee, others will forsake it in an attempt to earn larger profits.

What I want to know is: Do you, or other professional advisors offer that guarantee to your clients? Are you aware that such a guarantee exists?

Regards,

By: thinkingcarl

thinkingcarl — Wed, 02 Sep 2009 00:49:03 +0000

@Rick: One of the reasons it is called the equity or risk premium is
that there have been, and will continue to be long periods of time
where it does not exist.

Some of these periods are long, like 30 years long. So no I'm not
predicting the end of the stock market. What I am saying is that it is
time we understand that the risk premium is called that because it is
far from certain.

Far from a prediction, this is history.

Hope that helps.

By: Tommy

Tommy — Tue, 01 Sep 2009 18:54:01 +0000

Rick,

People have been investing in the stock market for the last 10 years and have not received any risk premium. But the POTENTIAL is there and that's what investors have been looking for. We enjoy being sold the potential in the market, even if it never arrives. And Wall Street is more than happy to oblige us…

The stock market will remain as long as gambling remains. And that will be a long time…