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Who says you have to invest in Dow Jones' market during the 21st century? I'm sure it wouldn't be hard to get a 5.3% return in a more emerging market like, say,

by hobbs 18y ago

Who says you have to invest in Dow Jones' market during the 21st century? I'm sure it wouldn't be hard to get a 5.3% return in a more emerging market like, say, India or China.

epi0Bauqu 18y ago
An investor who wants the most return with the lowest risk will have a balanced portfolio across many asset classes, which would include both the Dow stocks and India and China in some fashion. That being said, the Dow companies already get a significant % of their earnings abroad. And this % is increasing.
- hobbs 18y ago
  Don't get me wrong, I completely agree with the original author. Warren's logic is circular and seems to be preying on people's inability to conceive of very large numbers. I'd fully expect DJIA to continue growing at roughly the same pace this century as the last. Even if it doesn't, though, everyone knows that the trick to successful investment is to buy low and sell high. There are still plenty of opportunities to buy low - even with limited risk - in large emerging economies. The U.S. may become a low-risk capital preservation stock and China will become the higher-risk investment stock.
nradov 18y ago
Actually it will be hard to get that kind of return in emerging market stocks for three reasons. 1) Emerging markets tend to be riskier, so if you look at it on a risk-adjusted basis the expected returns don't look as good. What happens to your assets if China has another revolution? 2) As a practical matter, an individual US citizen just can't buy equity in many emerging market companies. Either they aren't listed on US exchanges, or are privately held, or national goverments have ownership restrictions in place. There isn't even much in the way of mutual funds to do it indirectly. 3) The few stocks in the BRIC markets available for direct purchase by individual outside investors have already been bid up to ridiculous levels by dumb money who think they can't afford to be left behind. You may be waiting a very long time to see much significant upside.
- epi0Bauqu 18y ago
  In response to 2 (for anyone interested), look at EEM (an emerging market ETF).

by hobbs 18y ago

Who says you have to invest in Dow Jones' market during the 21st century? I'm sure it wouldn't be hard to get a 5.3% return in a more emerging market like, say, India or China.

epi0Bauqu 18y ago

An investor who wants the most return with the lowest risk will have a balanced portfolio across many asset classes, which would include both the Dow stocks and India and China in some fashion. That being said, the Dow companies already get a significant % of their earnings abroad. And this % is increasing.

hobbs 18y ago
Don't get me wrong, I completely agree with the original author. Warren's logic is circular and seems to be preying on people's inability to conceive of very large numbers. I'd fully expect DJIA to continue growing at roughly the same pace this century as the last. Even if it doesn't, though, everyone knows that the trick to successful investment is to buy low and sell high. There are still plenty of opportunities to buy low - even with limited risk - in large emerging economies. The U.S. may become a low-risk capital preservation stock and China will become the higher-risk investment stock.

nradov 18y ago

Actually it will be hard to get that kind of return in emerging market stocks for three reasons. 1) Emerging markets tend to be riskier, so if you look at it on a risk-adjusted basis the expected returns don't look as good. What happens to your assets if China has another revolution? 2) As a practical matter, an individual US citizen just can't buy equity in many emerging market companies. Either they aren't listed on US exchanges, or are privately held, or national goverments have ownership restrictions in place. There isn't even much in the way of mutual funds to do it indirectly. 3) The few stocks in the BRIC markets available for direct purchase by individual outside investors have already been bid up to ridiculous levels by dumb money who think they can't afford to be left behind. You may be waiting a very long time to see much significant upside.

epi0Bauqu 18y ago
In response to 2 (for anyone interested), look at EEM (an emerging market ETF).