IF YOU INVESTED $10,000 BACK WHEN……
I love this one.
"If you invested $10 000 in the stock market it would be worth $1million today". You can read this in a magazine or paper. What is the real truth behind this statement?
Here's the facts:
- There has been about 60 companies that have achieved this in the entire All ordinaries index. (Australian Stock Market)
- Of the 60, You would have had to purchase 23 of these companies prior to 1979. This means the $10,000 invested in the 1970's in todays dollars is vastly different due to inflation (Remember what the price of a house or can of soft drink was in the 1970's – You could buy a house in Sydney's wealthiest suburbs at this price)
- Only 13 of these companies at their lowest price had a share price of over 9 cents. i.e. you would be investing into a speculative company.
- You would of had to buy and sell the share on the day that it had it's lowest and highest price. i.e you had to be buying at the perfect time of a day in the right year. This is statistically unrealistic.
- 22 of these companies required you hold the shares for more than 25 years.
Summary: Investing $10 000 (equivalent to investing in the value of a house in the early 1970's) into a speculative company (share price of 0-9 cents) for greater than 25 years at the exact intra-day high and low to achieve a great return is very unrealistic. Read between the lines to see that marketing can often sell a concept that can never be achieved.
On the other hand I can think of a number of blue chip stocks that if you'd invested $10000 in the early 90s are worth several multiples of that.
If only i had bought FMG when it debuted at 50 cents or close to it, instead i bought this other crappy one-use, retractable syringe company's shares… :o(
crj,
How realistic is it for you to buy these stocks? Let us know the company, dates, prices, and I will break through all the BS and show how this is not very realistic for many people. Further I can than show you how this is still not a good option when considering opportunity cost.
casanovawa,
You have played this out the same as the many,
What you did mention was the upside…….. What you did not mention is that many people also purchased FMG between $5.00- $12.00 and today the price is $4.46. When people make an assessment you should also look at the downside because in the real world, in many cases the Cinderella stories are for people pulling the strings…….. No guesses who they are…….. Creating wealth is as much about learning what is marketing (smoke and mirrors) from large corporations vs what they do not want you to know.
Many financial institutions market the positives and then rely on Mum and Dad Australia to pass it on at a BBQ <moderator: delete>……..So just out of curiosity – and to compare apples with pears.
Are you assuming property with leverage and shares without leverage?
It wouldn't be very nice of me to encourage leveraging into the ASX at an interest rate of 10% (margin loans) with a low LVR and margin calls that are so prominent in today's market. So, No I cannot really compare the two leveraged markets as one market is practical and reduced risk, when the other is quite expensive and very high risk. Further, as you have eluded, the comparison of using money, must be with other palatable investments (leveraging into the ASX is not very palatable).
It would be interesting to compare the number of people that have increased their wealth from leveraged property versus leveraged equities. You know as well as I, the results this would bring……
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