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Mates, how your investments are going ?

by fredouil Wed Jun 14th, 2006 at 01:08:58 AM EST

As you know the sharesmarket is glomming and there are probably more "surprises" down the road.

where ET'readers like to invest their hard-earned money ?  

i am quite lucky with my investments, mostly because since 1999, i strictly follow a simple strategy (for 90% of my portfolio) :

i buy shares and indexes (Vanguard) in November and sell in May, since i enjoy return of 25-30%year.

of course i didnt invented this strategy, my father use it with success before me, since most of crash/downturn occur between may-november.

I use 10% of my portfolio, to play and stupidly feed others traders ;-).

Do you have any particular strategies rules yourself ?

Timing the market turns out not to be a good long term strategy. If there was an easy way to determine a pattern in prices then traders would start to anticipate it and it would disappear. It has also been shown that the bulk of the increase in share prices take place over very short periods so that being under invested at a given time increases the chances that you will miss the rise.

I've got several discussions on my web site about how stock prices are based upon false assumptions about "growth" so I won't repeat them here.

If you are saving for retirement (I don't know how relevant this is in Europe) the best long term strategy is to invest in a low cost, tax deferred, broad market stock fund and continue to make periodic contributions. Then just forget about it until you are ready to retire. Over the past 50 years this has worked out to about 8% which is about 2% over inflation in the US.

Since you asked, my retirement fund started offering a real estate based option about ten years ago. This fund buys real estate and holds it as an investment and as a source of current income from rents. It has averaged about 8% each year over the past decade and has never gone down in value, unlike the stock market. On the other hand it has never had the 20% rises in a single year that the stock market has had either.

Unfortunately I haven't seen any comparable funds offered to the general public. So the best one can do is, perhaps, 50% stock fund and 50% bond fund. The real risk with a stock fund is that if you are planning to retire in a year where it has gone down 30% it is as if you have just thrown away ten years of your retirement savings. This is a big risk to take for a retirement investment.

As to the current decline, the best thing to do for the individual investor is nothing. Panicking or trying to out guess the market is a fool's errand. The markets will recover in a few years at most.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Wed Jun 14th, 2006 at 10:03:52 AM EST
Irish banks offer property based funds pretty generally.
by Colman (colman at eurotrib.com) on Wed Jun 14th, 2006 at 10:23:07 AM EST
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