On Sun, 17 Apr 2005 12:51:11 GMT, Fred Stone <fstone69@earthling.com>
wrote:
http://uk.finance.yahoo.com/q/bc?s=^DJI&t=my
Hmmm. You seem to have hit a wall in the past five years.
Funny looking wall, all those ups and downs. Besides, the DOW only
counts 30 industrial stocks and doesn't indicate investment performance
because it doesn't count dividend yield.
Funny how Fred is all for "investing" in that "stock market" but has
zero knowledge about it:
First of all, the reason why DJIA "only" has 30 stocks is because
that is roughly the number of stocks you need to more or less track
the market at large [1]
Don't believe me? Let's compare S&P500 to DJIA shall we?
http://finance.yahoo.com/q/bc?t=5y&s=%5EDJI&l=on&z=m&q=l&c=&c=%5EGSPC
Ooohh spooky huh?
Since Fred Stone has a comprehension problem, I will explain graph
above to him. A) DJIA tracks S&P 500, which, surprise!, has 500
largest stocks in the market. B) S&P500 is about 10% WORSE than DJIA,
further undercutting FRed Stone's"argument"[2]
Secondly, volatility is NOT a good thing. All Those "ups and downs"
are the reason why the stock market has to offer a higher return than
the treasury bill. The idiocy with the NeoCons is that they see the
high side of the market without taking the risk into consideration.
Thirdly, dividend yields in general are in the range of 1-2%, lower
than a typical muni bond. Most of your winnings will come from capital
gains. Fred Stone is engaging a bit of a red herring here.
[1] This is onlly something you learn on the FIRST day of any remdial
finance class, right after the 5-minute cookbook presentation of the
CAPM model. If you don't even have THAT in your education, you're
going to get killed in the stock market.
[2] There's a reason for that. DJIA select 30 blue chippers, and if
they do badly enough they get replaced by another blue chipper. On the
Other hand, S&P500 and the market at large will contain companies that
go belly-up thereby dragging down your average.
-----
Yang
a.a. #28
AthD (h.c.) conferred by the regents of the LCL
a.a. pastor #-273.15, the most frigid church of Celcius nee Kelvin
EAC Econometric Forecast and Sorcery Division
Proudly plonked by Lani Girl and Crazyalec (aka aka Yang's little poltregeist *****)
The Bush 'balanced' budget: 1.6 trillion and worsening
The Bush 'economic' policy: 12 million FEWER jobs than Clinton and counting
The Bush Iraq lie: -1550 GIs, one friend's co-worker's son and mounting
Having Bush ***** up my country: Worthless
.
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