Expected Returns
Invest, don't speculate

It's that time of year again, when forecasters make predictions about stock returns. Should you believe them? We don't think so. It's interesting information, but usually that's all it is, information and noise.

Consider this from Dimensional Fund Advisors

"Ten years ago, for example, Brazil was on the verge of a currency collapse, and General Electric was among the largest and most admired firms on the planet.

Who would have thought that Brazilian stocks would soar sevenfold during the subsequent ten-year period, while GE shares fell 70%?"

We consider selecting specific stocks based on information about the economy, the industrial sector, the company, etc...speculation rather than investing (assuming you don't have inside information). If you speculate, you may do better or worse than what the market as a whole naturally provides.

To increase your odds of having a successful investment experience we recommend that you shut out the noise, keep your investment fees low, pick a strategy that mimics the general stock market, and take a long term view.

What is long term? At a minimum if you don't have a 5 year horizon don't invest in stocks or equity mutual funds. Check out the video to see how long is long.

Video - Equities and Bonds - Historical prospective.

Download - The 2009 Matrix book