@AverageJoe
""Time in the market, beats timing the markets, every time. Ask any rich guy""
Where did this line come from on the Forum? From your dialogue with Eshmun?
Certainly I've heard it from many reputable major Australian Financial Institutions, Fin. Advisors, Fin. Planners etc for decades now, tho' in slightly different words:
Something like:
"It's time spent in the market that counts, not when you get into the market " i.e. hold and keep, don't try and time the market, something like that. It's kind of a marketing slogan, in fact.
In the 1980's, in NY where I lived and worked 25 years on Wall St....this was the acronym "LTBH" - Long Term Buy and Hold. And it worked, in what was the longest bull mkt in US history, from about 1982, the end of massive interest rate hikes of Reagan / Volcker to purge systemic inflation, a cancer since the 1960's - which they achieved (at the price of a brief recession), a period of progressively falling interest rates (good for stocks) thru the crash at the turn of the century. It is predicated on a simple assumption: an environment of continually rising stock prices (which was the case), and Peter Lynch of Fidelity Magellan Fund became a national hero (Book : "One up on Wall St", or similar title, as best I recall).
I might add I don't think most the world's bourses are in that environment anymore (certainly not the underperforming ASX / 200), so it's usefulness as an Investment Strategy has vastly diminished, past its Use By date.
So, I'm looking at XJO, the symbol for the ASX / 200 index, the largest, most reputable companies in the country. And another reputable maxim, is "diversification" (not to put all eggs in one basket, etc..., and of course buying the whole market is the ultimate in diversification, and so, the extraordinary popularity of S&P 500 Index Funds, founded by John Bogle, of Vanguard, and as we both know, have outperformed over 90% of actively managed funds...with lower fees.
Indeed, I was not so long ago in S&P 500 ETF (the next step after Managed Funds) IVV on ASX, and also gaining from falling AUD.
Anyway I stumbled across this Chart I had of XJO.
Looking at it, it seems that the combination of almost 10 years in the market, with the ultimate in diversification. ..the two cardinal maxims...the return is zero Cap Gains over that period (excluding Dividends). So, on its face, these maxims would not appear not to have held water over the last decade.
Is it possible that the entire Financial Services Industry in Oz is and has been ......wrong....in its sage Investment Advice?
Surely not.
Surely this cannot be true. "Say it ain't so, Joe!" (See the fixed US World Series of 1919)
I'd note that this is not true of SP500 over that period (certainly since the trough of 2009, but US macro policies differed markedly from Oz, certainly since the crisis ("GFC"), from which the nation was saved by the Messiah (K. Rudd), conveniently ignoring the biggest mining infrastructure boom in a lifetime.....
It is true of ASX (I think) - zero Cap Gains.
Am I doing something wrong here?
XJO - WEEKLY
(20min delay)
