logo
g Text Version
Beauty & Self
Books & Music
Career
Computers
Education
Family
Food & Wine
Health & Fitness
Hobbies & Crafts
Home & Garden
Money
News & Politics
Relationships
Religion & Spirituality
Sports
Travel & Culture
TV & Movies

dailyclick
Bored? Games!
Nutrition
Postcards
Take a Quiz
Rate My Photo

new
European Travel
Action Movies
Bible Basics
Houseplants
Romance Movies
Creativity
Family Travel


dailyclick
All times in EST

Clairvoyance: 08:00 PM

Full Schedule
g
g Investing Site

BellaOnline's Investing Editor

g

Wall Street's Biggest Myth

Guest Author - Tony Daltorio

If you're like many investors, you are probably sitting on the sidelines now, wondering why your portfolio is in such bad shape. I think it is important to review some of the key bits of advice that Wall Street keeps pitching to retail investors. These are widely accepted investment adages that somehow became "gospel truth".

Probably the number one Wall Street investing adage is Buy and Hold. I believe that "Buy and Hope" is the greatest myth foisted on the American public in the last 200 years. As millions of investors have found out the hard way, stock markets can have long "down" periods.

Here are some historical facts which I'm sure that your financial advisor "forgot" to tell you. For someone who invested in the stock market in 1929, it took them until 1957 to break even and for someone who invested in the stock market in 1966, it took them until 1983 to break even.

Yes, stock markets always do go up in the long term. The key point is the definition of "long-term". If you mean a period of longer than 25 years, then yes the stock market will be higher. But for periods less than 25 years, it becomes more of an iffy proposition.

The stock market really is cyclical - long bull markets are followed by long bear markets. But Wall Street doesn't tell you that - they want the investing public in the game all the time.

ROCKY RETIREMENT

So it was not surprising to see data from the Employee Benefit Research Institute which showed that more than 30% of near-retirees or those in their early retirement years had more than 80% of their money invested in stocks at the beginning of this current crisis.

I feel terrible for those people. Those people had absolutely terrible financial advice from their advisors. Their portfolio allocation was completely wrong for someone in their situation.

Unfortunately, the risks of outliving your money go up dramatically if you are forced to sell in a bear market as we have now. According to T. Rowe Price, if you achieve annualized returns of zero or less for the first five years after you retire, your odds of running out of money in the next 30 years more than double from 26% to 57%!

For people in this situation, probably the best thing they can do now is to look at their overall portfolio and re-allocate the funds the best that they can.

This would probably involve moving assets to areas that I have talked about in the past. These would include: Treasury Inflation-Protected bonds (TIPS), bank CDs, some selected corporate bonds, dividend paying stocks with a strong balance sheet (such as BHP), high-growth emerging market stocks and gold.

If you have any questions or comments about this article, please feel free to contact me directly at any time - I am here to help you.
Add Wall+Street%27s+Biggest+Myth to Twitter Add Wall+Street%27s+Biggest+Myth to Facebook Add Wall+Street%27s+Biggest+Myth to MySpace Add Wall+Street%27s+Biggest+Myth to Del.icio.us Digg Wall+Street%27s+Biggest+Myth Add Wall+Street%27s+Biggest+Myth to Yahoo My Web Add Wall+Street%27s+Biggest+Myth to Google Bookmarks Add Wall+Street%27s+Biggest+Myth to Stumbleupon Add Wall+Street%27s+Biggest+Myth to Reddit



 



RSS | Related Articles | Editor's Picks Articles | Top Ten Articles | Previous Features | Site Map




For FREE email updates, subscribe to the Investing Newsletter


Past Issues


print
Printer Friendly
bookmark
Bookmark
tell friend
Tell a Friend
forum
Forum
email
Email Editor


Content copyright © 2014 by Tony Daltorio. All rights reserved.
This content was written by Tony Daltorio. If you wish to use this content in any manner, you need written permission. Contact Sandra Baublitz for details.

g


g features
Organize Your Finances

Multiple Streams of Income

Investing in Water

Archives | Site Map

forum
Forum
email
Contact

Past Issues
memberscenter


vote
Poetry
Daily
Weekly
Monthly
Less than Monthly



BellaOnline on Facebook
g


| About BellaOnline | Privacy Policy | Advertising | Become an Editor |
Website copyright © 2014 Minerva WebWorks LLC. All rights reserved.


BellaOnline Editor