how do shares perform over long periods?

Thrugelmir

Majority of return comes from reinvesting dividend income. Not capital growth.

Imperial Tobacco share price has risen over 300% since 2000, but over 600% if dividend income had been reinvested.

Over past 10 years Footsie is up 5.4% ( or 49.5% with dividends).

Remember the fable of the hare and the tortoise?

pqrdef

atush wrote: »

I have gained more than I have lost and am up overall. And took profits when shares double or even triple bagged so those assests are now in cash.

The point of volatile assets is that you can potentially make money by trading on the cycles.

But the question is whether you make money if you don't. "Average" implies that you don't take your profits, you just sit on the shares while they slide right back down.

chucknorris

pqrdef wrote: »

The point of volatile assets is that you can potentially make money by trading on the cycles.

But the question is whether you make money if you don't. "Average" implies that you don't take your profits, you just sit on the shares while they slide right back down.

This for me is the most interesting subject of owning shares, do you attempt to manage your position (which requires effort and a huge slice of luck) or are you just as well off by passively holding shares. I'm beginning to think that possibly holding shares by investing in low charge trackers might suit me best. What attracts me to these is that there is some minimal management (by sticking to what stays within that particular index) and you are not exposed to holding an individual share whose value collapses.

I still wonder though with trackers if it’s best to try and play the cycles, but of course by doing so you risk getting out to soon or buying back in again at the wrong time.

pqrdef

chucknorris wrote: »

or are you just as well off by passively holding shares.

In that case, the only prices of interest are the entry point and the exit point. Pay too much, and the opportunities to come out ahead may be few and far between.

It would be nice if some magic underlying growth factor gave a strong likelihood of coming out ahead after some number of years, irrespective of the price paid. But there doesn't seem to be one. So it still comes down to timing.

atush

pqrdef wrote: »

The point of volatile assets is that you can potentially make money by trading on the cycles.

But the question is whether you make money if you don't. "Average" implies that you don't take your profits, you just sit on the shares while they slide right back down.

True, I only take profits on my stockbroking acct (which is only a small part of my overall savings- I have 5-6 times as much in cash as I do there), not on my investment trusts.

But given I drip feed these investments (incl during the last two/3 market corrections or 'crashes') I buy many more units of investments during any slides (and all income is reinvested) so do well overall. It is very different for lump sum investments which I don't tend to do.

But my real point was the ordinary people who don't save, or save money under the mattress as it were, will be robbed by inflation.

Thrugelmir

pqrdef wrote: »

T
But the question is whether you make money if you don't. "Average" implies that you don't take your profits, you just sit on the shares while they slide right back down.

If you had invested in BP when it denationalised in 1974 and reinvested the dividend income. Despite its recent troubles you'd now be a very happy person.

sabretoothtigger

ftse 100 since 1984 is 3%

BP when it denationalised in 1974

I thought it was the eighties. Apparently 87 was the end but it started being sold in 74, did not know

Rollinghome

Thrugelmir wrote: »

Over past 10 years Footsie is up 5.4% ( or 49.5% with dividends).

I'm not sure that has any useful meaning other than for someone who invested 10 years ago rather than any earlier or later.

The FTSE is still below the position it reached 13 years ago and is still 12% lower than the point it reached in 1999. And neither of those figures tell us much either if, as we presumably are, more interested in future returns.

A to B figures are pretty much meaningless unless they're being used to sell an investment - especially if they take no account of inflation.

Linton

All the past n posts have been assuming that the investment was made in the FTSE100. There is talk of "The Market" whereas there are of course hundreds of markets.

The range of investments open to the private investor is vast, encompassing every country and every industry in the world. It includes equity where the return, if any, depends on the success of the company, and bonds where there is fixed rate interest, unless of course the bond supplier goes bust.

So, the OPs original question is rather meaningless. Over the years you could have chosen investments that quickly dropped to zero or ones that regularly provided 20% return. Its difficult to know how you could begin to calculate a useful average.

To give you some idea of what is reasonable without too much unusual luck: one of my portfolios is focussed on growth with little concern about temporary fluctuations. It has been running since 2002 and so has been through 2 major falls in global share prices. The average annual return is over 10%. As it's all in S&S ISAs the return is tax free.

grasslands

A report has appeared on MoneyCNN websbite saying "Wal-Mart: Our shoppers are 'running out of money".

Wal-Mart ( Fortune 500), which averages 140 million shoppers weekly to its stores in the United States, is considered a barometer of the health of the consumer and the economy.

So my understanding says that there will be no profits for world companies for next 2 years since world people have money for food items mainly. Understandably stock markets will not be profitable for next 2 years since less sales means less profits.

World people say real estates will fall by 20%.

Gold and Silver are at highest price so they are have high risk of crashing.

Forex is competition between international currencies so forex will be profitable as long as financial world is running. Due to major world events in near future Forex will be good profitable for next 2 years.