The Daily Dow
Wednesday, October 29, 1997
by Robert Sheard
LEXINGTON, KY. (Oct. 29, 1997) -- One thing Fools don't suffer easily is the lack of accountability of the Wise. And nothing gets me testy quicker than one of Wall Street's talking heads playing fast and loose with history to justify a weak position.
Normally I'm hesitant to name names but today I'll make an exception. Recently on CNBC, Michael Metz, the Chief Investment Strategist at Oppenheimer and a perennial bear, was making his usual growling noises about the market. The fact that he's been wrong regularly for years doesn't prevent him from proclaiming definitively the coming of the end for the Bulls.
But when one of the CNBC announcers challenged him with the notion that stocks have consistently produced better historical returns than any other investment choices, Metz bristled and begged to differ. He made the claim that one entering the market in the Sixties (I believe he said 1965 or 1966, but I can't recall the specific year) wouldn't have broken even for some 15 or 16 years (again, I was too shocked by the claim to write down the exact year to double check his claim).
Now I don't know what he considers the "market" but let's look simply at the Dow 30. At no time from 1970 on did the Dow 30 have a ten-year average return that was negative. (That rolling average in 1970 includes the prior decade and then advances each year to include the previous ten years.) And with the exception of 1970-1974, there was not even a five-year period with a negative average return. (The five-year average loss in that period was a whopping 0.27%.)
In other words, what the heck is Metz talking about? No one who invested in "the market," if we can assume the Dow 30 is a reasonable proxy for such an ambiguous term, lost any money if they stayed in at least a decade. Now, no one said the gains in stocks during the '60s were stellar, but where is the huge loss Metz claims stock investors suffered? And of course, anyone using the Dow Dividend Approach fared even better than the overall Dow 30 did.
Before you take as gospel what you hear these characters spreading around, get out your hip boots and wade through the facts (and whatever else you encounter) yourself. Wall Street never fired anyone for being too "prudent," even if it means their clients' returns are pathetic for years and years. So these guys are rewarded for being terminal Bears. Do yourself a favor, Fools, and turn off the business channels. (Heck, don't read my column, either, once you're comfortable with your own strategies.) Look at the evidence and decide for yourself and consign the gooroos to Dante's recently discovered tenth circle of Hell, where the gooroos must spend eternity listening to each other. Ouch!
(c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. ________________________________
Stock Change Last -------------------- T - 3/16 48.56 GM +1 3/16 68.06 CHV -1 7/16 80.94 MMM - 1/2 93.44
Day Month Year
Day Month Year
FOOL-4 -0.26% 3.66% 20.42%
DJIA +0.11% -5.52% 16.41%
S&P 500 -0.29% -2.97% 24.09%
NASDAQ +0.16% -4.91% 24.16%
Rec'd # Security In At Now Change
1/2/97 153 Chevron 65.00 80.94 24.52%
1/2/97 179 Gen. Motor 55.75 68.06 22.09%
1/2/97 479 AT&T 41.75 48.56 16.32%
1/2/97 120 3M 83.00 93.44 12.58%
Rec'd # Security In At Value Change
1/2/97 479 AT&T 19998.25 23261.44 $3263.19
1/2/97 153 Chevron 9945.00 12383.44 $2438.44
1/2/97 179 Gen. Motor 9979.25 12183.19 $2203.94
1/2/97 120 3M 9960.00 11212.50 $1252.50
CASH $1167.51
TOTAL $60208.07