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  #29  
Old 10-21-2008, 10:09 PM
Igor Chudov
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Default Re: Warren Buffett recommends buying U.S. stocks

On 2008-10-21, honda.lioness[at]gmail.com <honda.lioness[at]gmail.com> wrote:
- quote -

> Igor Chudov <ichu...[at]algebra.com> wrote:
> Re investing in stocks regularly a la Jeremy Siegel's _Stocks for the
> Long Run_--
> > The concept of dollar cost averaging is a result of a misunderstanding
> > of the exact meaning of return and capital.
> > > Intro
> > > http://en.wikipedia.org/wiki/Dollar_cost_averaging
> > > Criticism by Constantinides (I attended his options class at U of Chicago)
> > > http://web.archive.org/web/200303190....uchicago.edu/...

> By injecting this paper you seem to be conflating the answers to two
> very different questions, namely:
> 1. How should one invest money received in small sums over a long time
> (e.g. small sums from one's employment income)?
> 2. How should one invest money received as a lump sum (e.gl. an
> inheritance)?
> DCA is advisable for 1. but not necessarily for 2.


There are not many choices for 1.

There was an idea, which was incorrect, that dollar cost averaging a
lump sum is somehow better than investing all of it at once. It was
mistaken.

As for a person who is making monthly savings, what he is doing is
"investing money as soon as it is available". The return from that
would be the same as the return of the market, if properly
calculated. It is not any better, or worse.

- quote -

> http://www.moneychimp.com/features/dollar_cost.htm may clarify.
> Siegel's counsel in _Stocks for the Long Run_ concerns question 1. As
> long as one has a long timeframe, he advocates buying index funds at
> the prevailing market rate and reinvesting dividends.


Yep, that's what he is advocating.

i

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  #28  
Old 10-21-2008, 09:37 PM
honda.lioness@gmail.com
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Default Re: Warren Buffett recommends buying U.S. stocks

Igor Chudov <ichu...[at]algebra.com> wrote:
Re investing in stocks regularly a la Jeremy Siegel's _Stocks for the
Long Run_--
- quote -

> The concept of dollar cost averaging is a result of a misunderstanding
> of the exact meaning of return and capital.
> Intro
> http://en.wikipedia.org/wiki/Dollar_cost_averaging
> Criticism by Constantinides (I attended his options class at U of Chicago)
> http://web.archive.org/web/200303190....uchicago.edu/...


By injecting this paper you seem to be conflating the answers to two
very different questions, namely:

1. How should one invest money received in small sums over a long time
(e.g. small sums from one's employment income)?

2. How should one invest money received as a lump sum (e.gl. an
inheritance)?

DCA is advisable for 1. but not necessarily for 2.

http://www.moneychimp.com/features/dollar_cost.htm may clarify.

Siegel's counsel in _Stocks for the Long Run_ concerns question 1. As
long as one has a long timeframe, he advocates buying index funds at
the prevailing market rate and reinvesting dividends.

To answer your question

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  #27  
Old 10-21-2008, 08:22 PM
Default User
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Default Re: Warren Buffett recommends buying U.S. stocks

Augustine wrote:

- quote -

> On Oct 21, 11:55*am, "Default User" <defaultuse...[at]yahoo.com> wrote:
> > > You mean "dollar-cost averaging"? It sounds good at first, but it

> > hasn't historically proven to be of any benefit.

> Not quite. It has actually been proven to be of at least some
> benefit, if not beneficial most of the time.
> But I'd appreciate if you could provide some rationale for your
> statement.


Agreed, I should have said "overall benefit", rather than not of any
benefit.

For the most part, people don't have lump sums to invest anyway.





Brian

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  #26  
Old 10-21-2008, 07:25 PM
Augustine
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Default Re: Warren Buffett recommends buying U.S. stocks

On Oct 21, 11:55*am, "Default User" <defaultuse...[at]yahoo.com> wrote:
- quote -

> You mean "dollar-cost averaging"? It sounds good at first, but it
> hasn't historically proven to be of any benefit.


Not quite. It has actually been proven to be of at least some
benefit, if not beneficial most of the time.

But I'd appreciate if you could provide some rationale for your
statement.

TIA

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  #25  
Old 10-21-2008, 06:58 PM
Igor Chudov
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Default Re: Warren Buffett recommends buying U.S. stocks

On 2008-10-21, anoop <ghanwani[at]gmail.com> wrote:
- quote -

> On Oct 21, 9:55*am, "Default User" <defaultuse...[at]yahoo.com> wrote:
> > You mean "dollar-cost averaging"? It sounds good at first, but it
> > hasn't historically proven to be of any benefit.

> This is the first time I'm seeing someone say there's no benefit to
> doing dollar-cost averaging. Is there any study you can point to?


The concept of dollar cost averaging is a result of a misunderstanding
of the exact meaning of return and capital.

Intro

http://en.wikipedia.org/wiki/Dollar_cost_averaging

Criticism by Constantinides (I attended his options class at U of Chicago)

http://web.archive.org/web/200303190.../JFQA_1979.pdf


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  #24  
Old 10-21-2008, 06:43 PM
anoop
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Default Re: Warren Buffett recommends buying U.S. stocks

On Oct 21, 9:55*am, "Default User" <defaultuse...[at]yahoo.com> wrote:

- quote -

> You mean "dollar-cost averaging"? It sounds good at first, but it
> hasn't historically proven to be of any benefit.


This is the first time I'm seeing someone say there's no benefit to
doing
dollar-cost averaging. Is there any study you can point to?

Anoop

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  #23  
Old 10-21-2008, 04:55 PM
Default User
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Default Re: Warren Buffett recommends buying U.S. stocks

Augustine wrote:

- quote -

> On Oct 21, 8:34*am, Igor Chudov <ichu...[at]algebra.com> wrote:
> > > > I do not consider this the main theme of Siegel's books. Instead,
> > > his focus is on buying index funds and holding for the long run.
> > > But buying at what price?

> Dollar-averaging is the answer.


You mean "dollar-cost averaging"? It sounds good at first, but it
hasn't historically proven to be of any benefit.



Brian

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  #22  
Old 10-21-2008, 03:30 PM
Augustine
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Default Re: Warren Buffett recommends buying U.S. stocks

On Oct 21, 8:34*am, Igor Chudov <ichu...[at]algebra.com> wrote:
- quote -

> > I do not consider this the main theme of Siegel's books. Instead, his
> > focus is on buying index funds and holding for the long run.

> But buying at what price?


Dollar-averaging is the answer.

HTH

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  #21  
Old 10-21-2008, 01:34 PM
Igor Chudov
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Default Re: Warren Buffett recommends buying U.S. stocks

On 2008-10-21, Pierre Asselin <pa[at]see.signature.invalid> wrote:
- quote -

> Igor Chudov <ichudov[at]algebra.com> wrote:
> > Berkshire used to sell a compendium of Buffett's letters to
> > shareholders, which was a great and very useful reading, as far as I
> > am concerned.

> They're online now. http://www.berkshirehathaway.com/letters/letters.html


They are all worth reading. The printed form was very nice, though.

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  #20  
Old 10-21-2008, 01:34 PM
Igor Chudov
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Default Re: Warren Buffett recommends buying U.S. stocks

On 2008-10-20, honda.lioness[at]gmail.com <honda.lioness[at]gmail.com> wrote:
- quote -

> Igor Chudov <ichu...[at]algebra.com> wrote:
> On Jeremy Siegel --
> > Personally, I never trusted the "buy stocks at any price" theory,
> > especially when it is believed by too many people.

> I do not consider this the main theme of Siegel's books. Instead, his
> focus is on buying index funds and holding for the long run.


But buying at what price?

- quote -

> In particular I like how he emphasizes the importance of reinvesting
> dividends through thick and thin. We cannot time the market, and at
> times like today by continuing to buy stocks we get the triple
> compounding effect of dividends generally increasing over time;
> buying more shares because they are at bargain prices; appreciating
> as stock prices do over the long run.



- quote -

> Siegel has a more recent book out, as I recall, that updates or adds
> to _Stocks for the Long Run_.
> But a disclaimer is appropriate. Siegel is now an advisor of a major
> index yada fund company, wisdomtree.com .


This Siegel seems to be very interested in wringing every possible
dollar out of his fame. I personally would not trust him too much.
I will read his book, however.

i

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  #19  
Old 10-21-2008, 09:04 AM
Pierre Asselin
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Default Re: Warren Buffett recommends buying U.S. stocks

Igor Chudov <ichudov[at]algebra.com> wrote:

- quote -

> Berkshire used to sell a compendium of Buffett's letters to
> shareholders, which was a great and very useful reading, as far as I
> am concerned.


They're online now. http://www.berkshirehathaway.com/letters/letters.html

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  #18  
Old 10-21-2008, 03:36 AM
BreadWithSpam@fractious.net
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Default Re: Warren Buffett recommends buying U.S. stocks

Igor Chudov <ichudov[at]algebra.com> writes:

- quote -

> On 2008-10-20, dapperdobbs <GeorgeCFL[at]hotmail.com> wrote:
> > "Stocks for the Long Run" was written by Jeremy Siegel.
> > "Security Analysis" is Ben Graham, David L. Dodd, & Sidney Cottle.
> > Warren E. Buffett was Ben Graham's student.

> Berkshire used to sell a compendium of Buffett's letters to
> shareholders, which was a great and very useful reading, as far as I
> am concerned.


The Berkshire Hathaway quarterly and annual reports going
back to 1995 are all online in either html or pdf format
at <http://www.berkshirehathaway.com/reports.html
Buffett's annual Letters to the Shareholders are also
all online, going back to 1977:
<http://www.berkshirehathaway.com/letters/letters.html
Moreover, Buffett makes a point of releasing these documents
each year over a weekend, rather than during the trading
week.

Those letters are a goldmine.



--
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  #17  
Old 10-20-2008, 11:52 PM
honda.lioness@gmail.com
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Default Re: Warren Buffett recommends buying U.S. stocks

Igor Chudov <ichu...[at]algebra.com> wrote:
On Jeremy Siegel --
- quote -

> Personally, I never trusted the "buy stocks at any price" theory,
> especially when it is believed by too many people.


I do not consider this the main theme of Siegel's books. Instead, his
focus is on buying index funds and holding for the long run. In
particular I like how he emphasizes the importance of reinvesting
dividends through thick and thin. We cannot time the market, and at
times like today by continuing to buy stocks we get the triple
compounding effect of dividends generally increasing over time; buying
more shares because they are at bargain prices; appreciating as stock
prices do over the long run.

Siegel has a more recent book out, as I recall, that updates or adds
to _Stocks for the Long Run_.

But a disclaimer is appropriate. Siegel is now an advisor of a major
index yada fund company, wisdomtree.com .

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
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  #16  
Old 10-20-2008, 10:15 PM
Igor Chudov
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Default Re: Warren Buffett recommends buying U.S. stocks

On 2008-10-20, dapperdobbs <GeorgeCFL[at]hotmail.com> wrote:
- quote -

> "Stocks for the Long Run" was written by Jeremy Siegel.
> "Security Analysis" is Ben Graham, David L. Dodd, & Sidney Cottle.
> Warren E. Buffett was Ben Graham's student.


Berkshire used to sell a compendium of Buffett's letters to
shareholders, which was a great and very useful reading, as far as I
am concerned.

i


======================================= MODERATOR'S COMMENT:
Thank you for trimming the previous post and for being succinct.

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  #15  
Old 10-20-2008, 07:18 PM
dapperdobbs
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Default Re: Warren Buffett recommends buying U.S. stocks

"Stocks for the Long Run" was written by Jeremy Siegel.
"Security Analysis" is Ben Graham, David L. Dodd, & Sidney Cottle.
Warren E. Buffett was Ben Graham's student.

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  #14  
Old 10-20-2008, 05:15 PM
Igor Chudov
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Default Re: Warren Buffett recommends buying U.S. stocks

On 2008-10-20, PeterL <po.ning[at]gmail.com> wrote:
- quote -

> On Oct 20, 2:05*am, Igor Chudov <ichu...[at]algebra.com> wrote:
> > On 2008-10-19, honda.lion...[at]gmail.com <honda.lion...[at]gmail.com> wrote:
> > > > > > > > Igor Chudov <ichu...[at]algebra.com> wrote:
> > > > So far Buffett has been right about more or less everything.
> > > > He is celebrated as a messiah, I think because this sells copy for the
> > > media.
> > > > The truth is he has made some pretty large mistakes. To his credit,
> > > and perhaps what makes him pretty successful, is that he tries to
> > > admit his mistakes. He may be right that this is a good time to buy.
> > > Yet many are saying this. I am not impressed when it comes out of
> > > Buffett's mouth too. I would put more faith in the collection of
> > > sentiments expressed by Robert Shiller and Jeremy Siegel. Ultimately I
> > > put the greatest faith in the realities of economies: It is human
> > > nature to want to make life easier. Technologies develop as a result.
> > > Plus the population grows. In the long run, betting on stocks is a bet
> > > on the nature of economies.
> > > I had a second look at his book. I have not read it and bought it at

> > Amazon a few minutes ago. This guy's website is very insistent on
> > selling, signing up people and generally self promotion, which is a
> > turn off for me.
> > Whose book are you talking about?


Stocks for the long run.

- quote -

> > I will read his book and will try to see if I can make any comments.
> > > Personally, I never trusted the "buy stocks at any price" theory,

> > especially when it is believed by too many people.

> But buy stock at the right price is an excellent theory.


Hard to disagree.

If anyone believes the "buy stocks at any price" theory, it becomes
self defeating.

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  #13  
Old 10-20-2008, 03:20 PM
PeterL
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Default Re: Warren Buffett recommends buying U.S. stocks

On Oct 20, 2:05*am, Igor Chudov <ichu...[at]algebra.com> wrote:
- quote -

> On 2008-10-19, honda.lion...[at]gmail.com <honda.lion...[at]gmail.com> wrote:
> > Igor Chudov <ichu...[at]algebra.com> wrote:
> > > So far Buffett has been right about more or less everything.

> > He is celebrated as a messiah, I think because this sells copy for the
> > media.
> > The truth is he has made some pretty large mistakes. To his credit,
> > and perhaps what makes him pretty successful, is that he tries to
> > admit his mistakes. He may be right that this is a good time to buy.
> > Yet many are saying this. I am not impressed when it comes out of
> > Buffett's mouth too. I would put more faith in the collection of
> > sentiments expressed by Robert Shiller and Jeremy Siegel. Ultimately I
> > put the greatest faith in the realities of economies: It is human
> > nature to want to make life easier. Technologies develop as a result.
> > Plus the population grows. In the long run, betting on stocks is a bet
> > on the nature of economies.

> I had a second look at his book. I have not read it and bought it at
> Amazon a few minutes ago. This guy's website is very insistent on
> selling, signing up people and generally self promotion, which is a
> turn off for me.


Whose book are you talking about?


- quote -

> I will read his book and will try to see if I can make any comments.
> Personally, I never trusted the "buy stocks at any price" theory,
> especially when it is believed by too many people.



But buy stock at the right price is an excellent theory.

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  #12  
Old 10-20-2008, 09:05 AM
Igor Chudov
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Posts: n/a
Default Re: Warren Buffett recommends buying U.S. stocks

On 2008-10-19, honda.lioness[at]gmail.com <honda.lioness[at]gmail.com> wrote:
- quote -

> Igor Chudov <ichu...[at]algebra.com> wrote:
> > So far Buffett has been right about more or less everything.

> He is celebrated as a messiah, I think because this sells copy for the
> media.
> The truth is he has made some pretty large mistakes. To his credit,
> and perhaps what makes him pretty successful, is that he tries to
> admit his mistakes. He may be right that this is a good time to buy.
> Yet many are saying this. I am not impressed when it comes out of
> Buffett's mouth too. I would put more faith in the collection of
> sentiments expressed by Robert Shiller and Jeremy Siegel. Ultimately I
> put the greatest faith in the realities of economies: It is human
> nature to want to make life easier. Technologies develop as a result.
> Plus the population grows. In the long run, betting on stocks is a bet
> on the nature of economies.


I had a second look at his book. I have not read it and bought it at
Amazon a few minutes ago. This guy's website is very insistent on
selling, signing up people and generally self promotion, which is a
turn off for me.

I will read his book and will try to see if I can make any comments.

Personally, I never trusted the "buy stocks at any price" theory,
especially when it is believed by too many people.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
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  #11  
Old 10-19-2008, 09:18 PM
dapperdobbs
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Posts: n/a
Default Re: Warren Buffett recommends buying U.S. stocks

On Oct 19, 1:00*pm, Will Trice <n...[at]monitored.net> wrote:
- quote -

> Not to worry, you didn't sound offensive - to me anyway. *The link B
> posted does not require a login to read the article. *It appears that
> Buffett means "American" in the broadest sense: incorporated in the U.S.
> * So both See's and Anerican Express would qualify.
> -Will

Thanks for the definition. Wanted to make sure I wasn't misinterpreted
as sarcastic (which I did not intend). Many of the great American
corporate names have half of their business overseas, the bulk of that
half in Europe, but with increasing expansion plans for the Far East.
(I did try B's link again, and got the log-in page.)

Isn't it nice to have a garage sale of stocks? :-) PG, UTX, FAST, DD,
IR, EMR, even D ... I've been rummaging around looking for the ones
that aren't too used or broken. Just wish the seller would get those
hand-scrawled pricing stickers sorted out ... XOM jumps around almost
10% a day.

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  #10  
Old 10-19-2008, 08:15 PM
Igor Chudov
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Posts: n/a
Default Re: Warren Buffett recommends buying U.S. stocks

On 2008-10-19, honda.lioness[at]gmail.com <honda.lioness[at]gmail.com> wrote:
- quote -

> Igor Chudov <ichu...[at]algebra.com> wrote:
> > So far Buffett has been right about more or less everything.

> He is celebrated as a messiah, I think because this sells copy for the
> media.


I think that a more proper term would be "oracle".

- quote -

> The truth is he has made some pretty large mistakes. To his credit,
> and perhaps what makes him pretty successful, is that he tries to
> admit his mistakes. He may be right that this is a good time to buy.
> Yet many are saying this. I am not impressed when it comes out of
> Buffett's mouth too. I would put more faith in the collection of
> sentiments expressed by Robert Shiller and Jeremy Siegel. Ultimately
> I put the greatest faith in the realities of economies: It is human
> nature to want to make life easier. Technologies develop as a
> result. Plus the population grows. In the long run, betting on
> stocks is a bet on the nature of economies.


I would love to know more about what their recommendations are.

To me, betting on anything is a lot safer when the price is cheap,
than when it is expensive.

Personally, I hate losing money even more than I like making money, so
I am glad that I did not lose anything in 2001 and 2008, yet.
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Tags
buffett, buying, recommends, stocks, warren
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