While the passive relax on a tropical cruise, the active are singin’ the Speculation Blues.
– The Speculation Blues
the first 11 steps, I have explained the benefits of being a long-term investor and the pitfalls of being a short-term speculator. I have warned against the dangers of stock picking and market timing. I have spelled out the problems with manager picking. I have pointed a flashlight at the silent partners lurking in the shadows. I’ve done all of it to get you to the point where you can tie yourself to the mast and resist the siren songs of speculation, and invest in a risk-appropriate, rules-based index portfolio. As you’ve learned, the stock market has appropriately rewarded those who have invested for the long term. However, staying the course is difficult due to the bombardment of bad news that causes us concern about our economic certainty. For example, confidence was high on October 9, 2007, when the Dow Jones Industrial Average (DJIA) reached its peak of 14,164. The DJIA then steadily declined for over a year, followed by a sharp drop of 22% in the 8 trading days from October 1 to 10, 2008. The stock market then continued its decline over the next five months and bottomed out at 6,547 on March 6, 2009. Many investors pulled out of the stock market for the safety of money market funds during this prolonged and painful time period. The DJIA then shot back up, closing at 17,068.26 on s we have climbed our way up
This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...