Saturday, October 11, 2008

After preposterous faux-statistics on the upside, welcome to the astonishing world of bizarre downside statistics. The WHOLE POINT of the market is that it steadfastly refuses to repeat itself -- the existence of the expectation of repetition short-circuits repetition. So, responsible organs of journalism are now using their expertise -- which, as far as I can tell by reading the article, consists of looking at the graph included in the article -- to encourage people sell companies whose ROC : 5 Year Prime Rate ratios are three and four to one, just because they are expected to go down, based on historical analogies. After the markets settle down and we are in for grueling multi-year period of sideways stocks, slow growth, low volatility and low interest rates, people will start appreciating how hard a stock has to work in order to get back the ten percent that people threw away in their panic selling, and they'll look back on their investments and kick themselves.

But here's an idea. To encourage Buy and Hold, online brokerage firms should have an option that shows people the difference between the price where they sold a stock and where it is now, and add it together as money that was left on the table.

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