Stocks go up over the long run? - Trading-Lab

BuyLowSellHigh · #1 07-25-2007, 01:11 PM

it's a generally accepted principle that stocks go up over the long run. That is why it's good practice when you are young to have a large chunk of your retirement money always invested in the stock market.

But do stocks really go up over the long run after taking into account inflation? I'm afraid that once we inflation adjust stock performance, they won't be as good as they were before? Do I make sense? or am I just plain wrong?

StockOperator · #2 07-27-2007, 05:03 PM

stocks DO go up over the long run no doubt. That is a FACT. What we should ask ourselves is whether the growth figure they have been feeding us (12% a year roughly) is genuine or not, after taking inflation and a few other things into account.

ProTrader · #3 08-23-2007, 06:26 PM

Quote:

Originally Posted by BuyLowSellHigh

But do stocks really go up over the long run after taking into account inflation?

hmm no…but Wall Street loves when we believe that!!

Leth · #4 10-05-2007, 03:00 AM

markets have always trended up, down, or sideways ever since they began. all you have to do is be on the right side of the trend. enron didnt eventually go up in the long run.

rookie · #5 10-05-2007, 02:04 PM

Quote:

Originally Posted by Leth

markets have always trended up, down, or sideways ever since they began. all you have to do is be on the right side of the trend.

Easier said than done. how do you actually accomplish that? Not that I'm trying to be critical or anything...I'm just curious

Leth · #6 10-06-2007, 03:39 AM

you never know if a market is going to trend...no one can. thats why managing your risk is important. cut losers...ride winners. a loss limiting trend following system can help you. however, this is the hardest system to utilize because most people don't likes to follow rules and trade long term.

ProTrader · #7 10-08-2007, 03:41 PM

most people love to break the rules!

rookie · #8 10-08-2007, 04:28 PM

Quote:

Originally Posted by Leth

you never know if a market is going to trend...no one can. thats why managing your risk is important. cut losers...ride winners. a loss limiting trend following system can help you. however, this is the hardest system to utilize because most people don't likes to follow rules and trade long term.

thanks for the explanation. can you be more specific, when you say "loss limiting trend following system". do you mean a simple moving average crossover system? thanks

Leth · #9 10-09-2007, 03:44 AM

1. loss limiting means cutting small losses so they will not turn into big losses.

2. trend following means if the price is going up..be long; if the trend is going down..be short

3. using a system means putting a set of rules in place that tell you when to get in a trade...when to exit a trade with a profit/loss...how much of your total trading capital to bet on a trade; etc.

4. trend following does not use any indicator other than price since all the information needed on a particular equity is stated in the price...price is the only thing you can trust. you will find that backtesting will prove this again and again. moving averages (mostly EMAs which follow more recent price movements than SMAs) and price breakouts are considered the most useful overlays in this type of trading. rules and risk management are even more important. (see definition 3 above)

its hard to hang the big picture in this one post...i may start a blog, with the permission of alchemist, that can help explain this in more detail...both psychology (most important), and methodology.

Alchemist · #10 10-09-2007, 08:04 AM

Hello Leth,

of course you can start your own blog. actually, you are encouraged to do so (as long as it's non-commercial in nature

. Helping and sharing is what Trading-Lab is all about. So go ahead and start your own blog and/or journals

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#1 07-25-2007, 01:11 PM
BuyLowSellHigh Junior Member Join Date: Jun 2007 Posts: 20	Stocks go up over the long run? it's a generally accepted principle that stocks go up over the long run. That is why it's good practice when you are young to have a large chunk of your retirement money always invested in the stock market. But do stocks really go up over the long run after taking into account inflation? I'm afraid that once we inflation adjust stock performance, they won't be as good as they were before? Do I make sense? or am I just plain wrong?

#2 07-27-2007, 05:03 PM
StockOperator Member Join Date: Jun 2007 Posts: 32	stocks DO go up over the long run no doubt. That is a FACT. What we should ask ourselves is whether the growth figure they have been feeding us (12% a year roughly) is genuine or not, after taking inflation and a few other things into account.

#4 10-05-2007, 03:00 AM
Leth Super Moderator Join Date: Oct 2007 Posts: 621	markets have always trended up, down, or sideways ever since they began. all you have to do is be on the right side of the trend. enron didnt eventually go up in the long run.

#6 10-06-2007, 03:39 AM
Leth Super Moderator Join Date: Oct 2007 Posts: 621	you never know if a market is going to trend...no one can. thats why managing your risk is important. cut losers...ride winners. a loss limiting trend following system can help you. however, this is the hardest system to utilize because most people don't likes to follow rules and trade long term.

#7 10-08-2007, 03:41 PM
ProTrader Senior Member Join Date: Jun 2007 Posts: 109	most people love to break the rules!

#9 10-09-2007, 03:44 AM
Leth Super Moderator Join Date: Oct 2007 Posts: 621	1. loss limiting means cutting small losses so they will not turn into big losses. 2. trend following means if the price is going up..be long; if the trend is going down..be short 3. using a system means putting a set of rules in place that tell you when to get in a trade...when to exit a trade with a profit/loss...how much of your total trading capital to bet on a trade; etc. 4. trend following does not use any indicator other than price since all the information needed on a particular equity is stated in the price...price is the only thing you can trust. you will find that backtesting will prove this again and again. moving averages (mostly EMAs which follow more recent price movements than SMAs) and price breakouts are considered the most useful overlays in this type of trading. rules and risk management are even more important. (see definition 3 above) its hard to hang the big picture in this one post...i may start a blog, with the permission of alchemist, that can help explain this in more detail...both psychology (most important), and methodology. Last edited by Leth : 10-09-2007 at 03:47 AM.

#10 10-09-2007, 08:04 AM
Alchemist founder of Trading-Lab Join Date: May 2007 Location: New York, NY Posts: 296	Hello Leth, of course you can start your own blog. actually, you are encouraged to do so (as long as it's non-commercial in nature . Helping and sharing is what Trading-Lab is all about. So go ahead and start your own blog and/or journals __________________ Happy Trading!