3 ms·

http://finance.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Logarithmic&chdeh=0&chdet=1221681600000&chddm=3927595&q=INDEXSP:.INX&ntsp=0 http://finance.g

http://finance.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Logarithmic&chdeh=0&chdet=1221681600000&chddm=3927595&q=INDEXSP:.INX&ntsp=0 http://finance.google.com/finance?chdnp=1&chdd=1&chd... Yes, I can see how you would think that. There's even a small chance that 1999-2014 or 2000-2015 will be the first fifteen-year stretch in which stocks were not profitable to own (these data only go back to the 20's -- see Ibbotson's research for more). From the comments: "Today I lost the faith and ended all my investments in stocks. Maybe it comes back, but all experts seem to agree that it is extremely unsure what the future will bring. Too much uncertainty for me. Today 6% interest on a 5 year deposit seems like a very good deal." This is not exactly rational behavior. Stocks are ownership in a business. Consider the parable of Mr. Market: you and Mr. Market have founded a startup, despite Mr. Market's diagnosed case of manic depression. Every day, Mr. Market will offer to buy your share in the business, or sell his, at a particular price. Today, Mr. Market cut his asking price by another 3% -- when he's offering his share of the business for less, why does that make you want to sell?

jon_dahl 18y ago
| This is not exactly rational behavior. Exactly what behavioral finance has found. IMO, investing well is less about making the right picks (buy x now, sell y now) and more about saving yourself from yourself. After the market has been down for 8 months, people get scared and feel the need to get out of stocks. But that's exactly the wrong time to get out.
coliveira 18y ago
". Today, Mr. Market cut his asking price by another 3% -- when he's offering his share of the business for less, why does that make you want to sell?" You only want to sell if your business is buying and selling stocks, and not owning a business. Most people get confused by the difference between owning part of a business (and making money on the long run), and making money by buying and selling stocks. These are two distinct ways of making money, although they use the same instrument. It is in a sense similar to investing in real estate and flipping houses. On the other hand, the Wall Street model favors the short-term traders. For example, in the case of bankruptcy the stock owner loses everything, while the short seller makes big bucks...
- byrneseyeview 18y ago
  Most people get confused by the difference between owning part of a business (and making money on the long run), and making money by buying and selling stocks. A stock is a way to divide up a business. The distinction is that you can rapidly trade stocks, not that you should. On the other hand, the Wall Street model favors the short-term traders. For example, in the case of bankruptcy the stock owner loses everything, while the short seller makes big bucks... This doesn't make sense. If you short a private business, the same thing will happen (it is extremely rare to actually do this, but UBS did 'short' LTCM through a swap deal).

jon_dahl 18y ago

| This is not exactly rational behavior. Exactly what behavioral finance has found. IMO, investing well is less about making the right picks (buy x now, sell y now) and more about saving yourself from yourself. After the market has been down for 8 months, people get scared and feel the need to get out of stocks. But that's exactly the wrong time to get out.

coliveira 18y ago

". Today, Mr. Market cut his asking price by another 3% -- when he's offering his share of the business for less, why does that make you want to sell?" You only want to sell if your business is buying and selling stocks, and not owning a business. Most people get confused by the difference between owning part of a business (and making money on the long run), and making money by buying and selling stocks. These are two distinct ways of making money, although they use the same instrument. It is in a sense similar to investing in real estate and flipping houses. On the other hand, the Wall Street model favors the short-term traders. For example, in the case of bankruptcy the stock owner loses everything, while the short seller makes big bucks...

byrneseyeview 18y ago
Most people get confused by the difference between owning part of a business (and making money on the long run), and making money by buying and selling stocks. A stock is a way to divide up a business. The distinction is that you can rapidly trade stocks, not that you should. On the other hand, the Wall Street model favors the short-term traders. For example, in the case of bankruptcy the stock owner loses everything, while the short seller makes big bucks... This doesn't make sense. If you short a private business, the same thing will happen (it is extremely rare to actually do this, but UBS did 'short' LTCM through a swap deal).