Invest to secure your financial future

There are so many talks about RE investment on this forum, thanks for the sharing of many glorious stories on successful RE investments here. Per Miat42 kind and persuasive posts over past weekend about the potential downturn on RE, it might be a bowl of cold water on some hot heads.

I am long term bullish on the US stock market. I only invest on stock market (except my residence house). Buy and hold a bunch of stocks is my biggest enjoyment and hobby since I began to invest in mid 90s.

Stock market is risky for most people. For short term investors, 90% people lose money. Even for fund managers, 70-80% of them under perform S&P 500 index return. For the fund managers who can continuously beat S&P 500 index for many years are hard to find. Bill Miller, who beat the S&P 500 since 1990, lost his momentum in 2006 with negative return vs. S&P 500’s 15.8% return. The reasons for Bill Miller’s loss were primarily due to his strong belief on housing stocks like TOL, CTX, BZH, KBH, etc. plus his big bets on AMZN, EBAY, UNH, etc..

If you are not good at pick particular stocks, you can invest in indices or mutual funds like SPY (S&P 500 index, statistically 10%+ annualized return since 1926, but you have to buy and hold for long term), IWM (Russell 2000 index ETF, historically highs since end of 2003), etc.. When you do your research on some ETFs or mutual funds, make sure you check their long term returns and make sure it is still the SAME fund manager to manage the same fund. Bill Miller’s Legg Mason (LM) is not a bad choice if you are a strong believer that he will beat S&P 500 for the long run.

Long term hold is very crucial in stock market investing. Warren Buffet never tries to time the market, his strategy is buy and hold for long term and his strategy makes him the 2nd richest man in the world. His annualized return is 21.5% for 42 years (since 1965), 22.5% for 35 years, 22.7% for 30 yrs, 21.6% for 25 yrs, 19.3% for 20 yrs, 14% for 10 yrs, and 13.1% for 5 years (data per my calculation). Long term hold pays off handsomely.

Don’t be scared by the losses you had during the bad years. If you leave the stock market because you lost money past, it will be your loss forever.

Don’t be greedy either when you should take some of your profits off the table. It is never wrong when you make profits in the market.

Investment is a life long lesson. Nobody can predict the future, gains / risks always coexist. No pain, no gain. No risk, no gain.

The best time to invest in the market is "when ever you have the money", quotes Warren Buffet.