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Dave’s Investment Blog » Blog Archive » When Will the Bell Ring for the Bottom of this Stock Market Crash?
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When Will the Bell Ring for the Bottom of this Stock Market Crash?

If you are waiting for the stock market pundits to sound the all clear, you are going to miss out on some fantastic opportunities to make money!!
According to Standard & Poor’s since 1928 through the end of 2008 the average annual total return (price change plus reinvested dividends) has been 9.7 %
From 1930 to 1939 the average annual total return was 5.3%. In the twenty years following the depression years the average annual total return was double digit percentages. 10.3% for the years 1940-1949 and 20.8 % for the years 1950-1959.
If you have funds that you can afford to invest and leave in the U.S. stock market for the next five years, the time to put that money to work is now.
Since the last 8 years have provided an unusually low annual total returns of -9.1% we are now going to experience a phenomenon called regression to the mean. This means that the normal return has been 9.7% and because of the low returns for the last 8 years the stock market annual total returns will have to be much greater than 9.7% to sustain the normal earnings of invested capital over the last 80 years. No one will continue invest their capital and lose money. Corporate Executives, managers, and rank-in-file workers understand that just as laborers must get paid so must investors. Without investors there will be no corporations. Without corporations there will not be any jobs. Without corporations the capital markets will not be able to efficiently allocate capital. Every attempt at alternative methods of allocating resources has proven to be destructive to the common person. In our system one can start at the bottom and work their way to the top!
Our economic base is damaged however still breathing. Now as the repairs to the damages in our financial system occur our economy will eventually start to grow again as measured by our G.D.P. (Gross Domestic Product). As people who are employed continue to spend and save their earnings our financial system’s health will improve. As our financial system improves more people will be employed and we will start to have a positive feedback cycle in our economy. Earnings will grow as these events occur and stock prices will rise.
These events are transpiring at the micro level of our economy now. On my website, DavesFavs.com, in November of 2008 I recommended the purchase of Netflix, Inc. (NFLX) and sold it last month with a 76% gain. In January 2009, I recommended the purchase of Cigna Corp. (CI) which has risen by 36% so far.
The bottom occurred on November 21st, 2008, the day after I wrote my blog “Are we there yet? Have We Reached Financial Armageddon?” I wrote about the advantages of investing in the market then.
Had an investor followed my advice, the return on their investment would have been 9.9% as of last Friday, February 13th, 2009 which is an annualized return of greater than 38%.
The news is bad and it probably will stay bad for a while. Many people are suffering. This will all change for the better. This is one of the best investment opportunities in the history of humankind. They don’t ring a bell at the bottom. I did. I’m calling to you now!!! The money train is pulling out of the station, if you can invest get on board! Your investment could quadruple in the next five years.

May your day be a profitable one,
Dave

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