Monday, May 07, 2007

Investment and returns

So... here's an interesting discussion in the comments on how to invest - buy and hold vs active trading.

Things that caught my eye:
1) "An investor who bought the Nasdaq index in 1973 and sold in 2002 would have earned an average yearly return of 9.6 percent. But the typical investor in Nasdaq earned only 4.3 percent over this period."
Which gives me two numbers on expected returns from investment. And..

2) "Peter Lynch always said the advertised returns of his funds were always considerably better than those realized by the investors of the funds. Investors buy what has been hot recently and then sell when they under perform."

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