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December 2, 2014

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Gaining from financial destruction

By Morgan Housel






JewishWorldReview.com | After the Dow Jones hit a new record high this week, more than double its 2009 lows, The Wall Street Journal published one of the most inevitable headlines of all time.

"Market Rewarded Those Who Stuck It Out," it read.

You don't say.

The only thing worse than suffering through a period like the last five years is suffering and not learning anything from it. To me, there are three imperative investment lessons from the last five years. That "markets reward those who stick it out" is one of them.

For those who stuck out the last five years, the 2008 crash -- literally one of the sharpest wealth destroyers in history -- is now a set of painful memories at worst, and a once-in-a-lifetime opportunity at best. If you did nothing, your portfolio is likely larger today than it was in 2007. If you bought steadily over the last five years, it's probably much larger. Only if you sold near the bottom and hid somewhere else have you lost money.



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History is clear on this: Hold stocks for a long time, and your odds of making money are very high. Since 1871, there have been only four periods when an investor purchasing stocks didn't make money in real (inflation-adjusted) terms over a 10-year period: 1908, 1929, the late 1960s and the late 1990s.

If you purchased stocks once a month, every month, since 1871, 87.8 percent of your purchases would be profitable 10 years out, even adjusted for inflation. The four brief periods that left you in the red after a decade were invariably followed by above-average returns. Stocks rose despite the aftermath of a civil war, two world wars, a flu pandemic, terrorist attacks, droughts, presidential assassinations, depressions, recessions, crippling debts, bank runs, high inflation, deflation, oil embargoes and a dozen bubbles. Through it all, the market rewarded those who stuck it out. It is the same story time and again. It was no different this time, and it will likely be no different next time.

What else did we learn from the last five years? One of my favorite quotes from investor Jeff Gundlach is, "In risk assets, you make 80 percent of your money 20 percent of the time."

During the 21,000 or so trading days between 1928 and today, the Dow Jones went from 240 to 14,000, or an average annual return of 5 percent (not including dividends). If you missed just 20 of the best days during that period, annual returns fall to 2.6 percent -- which is to say, half of the compounded gains took place on 0.09 percent of days. That's the numerical version of Gundlach's wisdom.

Sure, if you missed the 20 worst trading days, you would have done much better. But most of the 20 best trading days and the 20 worst trading days happen during the same periods, often in the same months. No one can time the market so perfectly as to jump in and out on the exact right days. So what happens is that those who try to avoid the market's big drops tend to miss the market's even bigger gains. Those who sold when the Dow was at 8,000 may have thought they were smart when it continued to fall to 6,000. But then, before they knew it, it was back above 10,000, 12,000, 13,000, 14,000 ... and their attempt to time the market ended up costing them serious money. If you want to consistently enjoy the market's big gains, you have to put up with its declines from time to time. Trying to avoid that reality is one of the surest ways to earn poor returns. This, too, is the same story over and over again.

The third lesson from the last five years is that the single most important question an investor can ever ask is, "How long am I investing for?"

If you're a day trader, a down day is a loss. If you're five years from retirement, a down year can be scary. If you're in your 20s and saving for retirement, a down decade means little. The same outcome during a given period of time can mean very different things for different people.

My view is that money you'll need to access within five years shouldn't be in the stock market at all, and money you won't need for at least a decade should not only be in stocks, but invested with the view that at some point it will almost certainly lose half its value (temporarily). Volatility is part of the deal. It's perfectly normal.

If you know you're investing for the long haul, these ups and downs -- even a severe crash like 2008 -- take on a whole new meaning. I think a lot of why so many investors cashed out and hid on the sidelines over the last five years is that they never even asked themselves how long they were investing for. A young worker with three decades before retirement saw markets falling, and his first instinct was, "Get out, now!" when it realistically should have been: "Look, never before in history has an investor lost money in stocks on a 30-year basis. And stocks are cheap right now. Even if they go down much further, it doesn't make sense to sell."

On the other side, near-retirees found themselves caught off guard when money they needed now suddenly lost half its value. So asking yourself how long you have to invest goes both ways. What's important is that there is never a blanket definition of whether you should buy stocks right now. Who you are and how long you have to invest can create two different rational answers at the same time.

Someday, this will all happen again. More recessions, more crashes. And when it's all over, the same headline -- "Stocks Reward Those Who Stuck It Out" -- will be published yet again.

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Morgan Housel, a columnist at The Motley Fool, is a two-time winner, Best in Business award, Society of American Business Editors and Writers and Best in Business 2012, Columbia Journalism Review.


Previously:


How to read financial news

Housing: Partying like it's 1925

A rebuttal to student loan horror stories

CONGRATULATIONS: We just saved half a trillion dollars

End this crazy tax: It will boost the economy

Medicare: A dangerously good deal

Economic future looks bright

The Biggest Threat to Your Portfolio (It's Not What You Think)

Bond Market Bull Run dead at 30



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