A couple of days ago I met a well educated, intelligent, worldly, successful 70 year old local real estate developer and Realtor. During the course of our conversation she mentioned she had sold all the stock she had owned during the last market downturn and had put nothing back into the market since. She is only the latest among many who over the past 40 or so years have made this comment to me after one of the downturns since the mid 1970's.

Based on my experience
 

When, it comes to money people rarely tell you the truth.

It is perhaps like fishing. I recall reading somewhere we do not allow any cameras on our boat because it prevents growth after they have been caught.

You do not say how you know this lady. Was she trying to SELL you on the idea of buying, investing in real estate.

In 2007 when the stock market dived so did real estate. If, I recall from my reading the only thing that did not go down was gold.

She was not trying to sell me real estate. I am a real estate broker and developer myself. She was seeking my advice on a commercial development she was considering. Her comment was purely an aside when we started discussing retirement. She simply shared what she had done with her stock market investments. No more. No less.

S&p
 

What does that mean...9.9%? Annually?


Jan1, 1988. 250.5
Today. 2443.25

Simple to explain
 

Rule of 72-You take the rate of return divide it into 72 and it will give you the years for money to double. 72 div 9.9%=7.27
So 2017-1987=30 years div 7.27=4.12x to double

250.5x2=501 501x2=1002 1002x2=2004 2004x2=4008
There is nothing so powerful as the magic of compounding.

Life is a limiting factor and the slow bleed sometimes called taxes. In such things as college funds, they live forever and compound forever. Oh and they are free of taxes.

Inflation also compounds. The fed says they want 2% inflation. What they are saying is that in 36 years assuming we are still alive you will need twice as many dollars to buy what it does today. NO GOVERNMENT IN HISTORY HAS BEEN ABLE TO CONTROL INFLATION TO THE LEVEL THE FED IS FEEDING US. The best shell game re: inflation was reagan. He controlled inflation by removing the two items suffering the most inflation at the time from the number-fuel and housing.

Slightly off topic, but I thought I would plug this question in here for those who have an interest in talking about stocks.....

Any thoughts on T now?

I have been buying AT&T every time it dips below the price that makes the dividend over 5%. Right now at 36 it's a 5.39% dividend. I started buying it when it was 32, sold half when it hit 41 and have been buying more on every pull back. Solid company, great dividend, and will continue to buy.

Have done the same purchasing, but not the same selling. Just purchased and enjoyed.

:024:

If you are getting 8% return, and someone else is getting 4%, in the long run, you are almost assuredly taking more risk. Balanced index funds are the way to go unless you are the one in a million investor that is smarter than the overall market. This year's winning stock picker is next year's forgotten under performer.

I know I did a bit of a segue, but thank you to those who commented on T. The fact that T is getting beat up a little right now has my attention. I think it visited its 52-week low today.

T is a great longtime hold for dividend income.

I had a buy order for 1000 hares at $35.50 but it only got down to $35.82. Dividend at 5.63% at that price. Maybe it will dip again today. Not many places you can get that return with an upside potential on the stock. PE at 17.6 makes it a great buy in this market. S&P PE is around 22 to 23 right now.

It would be nice to get a steady 9.9% a year ad infinitum. Those 8% a year performance charts that advisors showed me 15 years ago didn't take into account the "tech bubble", Fed raising rates, Fed lowering rates, "the Great Recession". If you average the ups and downs over a 15 year period and never take a withdrawal 6% annualized return seems to be more realistic.
Don't forget that your IRA rules will force you into RMDs at 70.5 wether you want or need the withdrawals.

The dividends from 1,000 shares of T would cover one's amenity fees (before taxes, if any). :beer3: