Realistic Investing Expectations

Over the long term stocks have provided us with great average return results. But this average return masks a great deal of volatility, because returns have fluctuated within a very wide band.

This extreme volatility is the chief risk of investing in stocks, but it is a risk that tends to recede from investors' memories after a lengthy period of generally rising stock prices.

Those investors new to investing in stocks may underestimate the volatility of stocks because volatility has been muted in recent years.

Time greatly reduces, but certainly does not eliminate the volatility in returns from stocks. On the other hand, there is no guarantee that you will earn above average returns even if you hold stocks for two decades or more.

Investors who are relatively new to investing in stocks may benefit from some perspective about bear markets. During the bear markets, Indexes declined an average of 25-35%. Although the average bear market lasted a little longer than 12 months, it took an average of almost 20 months for the Indexes to return to the levels achieved before the market downturns.

Although no one can reliably predict the timing of bear markets (or bull markets, for that matter), a prudent investor should understand the extent to which stock prices can decline and should be prepared to "ride out" these periods when they occur.

The big danger from bear markets is that investors will sell at or near the bottom of the downturn. Those who got out of stocks missed an extraordinary rebound in stock market performance.

Since risk is inescapable when investing in stocks, perhaps the greatest risk is that you will never invest in stocks because you can never be sure when is "the right time" to invest.

Uncertainty is a permanent feature of the investing landscape, and trying to discern the ideal time to invest is almost always a futile exercise.

Don't be swayed by market fluctuations or the opinions and predictions from market analysts and forecasters!

Your investment strategy and expectations should all be based on your personal objectives, time horizon, risk tolerance and financial situation.

It should not be determined by the direction of the financial markets or the opinions of "The Experts!"

haramis@greekshares.com http://www.greekshares.com

Ioannis - Evangelos C. Haramis was born in Greece in 1951 and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and editor of http://www.greekshares.com

MORE RESOURCES:

Allianz investing $2.5B in Hartford Financial - The Associated Press

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/0i-0fd=Rurl=http://www.earthtimes.org/articles/show/the-hartford-names-greg-mcgreevey-chief-investment-officer,567104.shtmlcid=1254771144ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNEcCWQn0xm2epMefjztLQxTbJHLOAimg src=http://news.google.com/news?imgefp=ZRejDSoZ9-gJimgurl=www.earthtimes.org/newsimage/Bus_20081006121021_81.jpg width=80 height=60 alt= border=1brfont size=-2Earthtimes (press release)/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/0-0fd=Rurl=http://ap.google.com/article/ALeqM5iTHQpRw9waGiHQoOfBHIjDufm6KQD93L1VG01cid=1254771144ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNGrYPN1mKr5LLlfjWmZt1_knfKSKwAllianz binvesting/b $2.5B in Hartford Financial/abrfont size=-1font color=#6f6f6fThe Associated Pressnbsp;-/font nobr16 hours ago/nobr/fontbrfont size=-1CHARLOTTE, NC (AP) â€” Hartford Financial Services Group Inc. said Monday it will receive a $2.5 billion binvestment/b from Allianz SE. The Hartford, Conn. b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/0-1fd=Rurl=http://www.wtnh.com/Global/story.asp%3FS%3D9129303cid=1254771144ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNGKjQE4e532tXrbCVBdXhhJN_D4ZwAllianz binvesting/b $2.5B in Hartford Financial/a font size=-1 color=#6f6f6fnobrWTNH/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1254771144hl=ennobrall 202 news articles/nobr/a/font/div/font/td/tr/table

Resist urge to cut losses; keep investing - Minneapolis Star Tribune

2nd UPDATE:Ackman:Wachovia Should Sell Businesses Separately - CNNMoney.com

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/2-0fd=Rurl=http://money.cnn.com/news/newsfeeds/articles/djf500/200810061346DOWJONESDJONLINE000549_FORTUNE5.htmcid=1254866699ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNFIT5_iTnJelVMs-aYNMrsqfxflUA2nd UPDATE:Ackman:Wachovia Should Sell Businesses Separately/abrfont size=-1font color=#6f6f6fCNNMoney.comnbsp;-/font nobr12 hours ago/nobr/fontbrfont size=-1Speaking at the fourth annual Value bInvesting/b Congress at Lincoln Center in New York , Ackman said his hedge fund has piled into Wachovia shares because he b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/2-1fd=Rurl=http://www.streetinsider.com/Insiders%2BBlog/StreetInsider.com%2BReporting%2BFrom%2BValue%2BInvesting%2BCongress%2BToday/4044496.htmlcid=1254866699ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNHddVbU02iIQ4rAZHArtGfEqiTjXQStreetInsider.com Reporting From Value bInvesting/b Congress Today/a font size=-1 color=#6f6f6fnobrStreetInsider.com (subscription)/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/2-2fd=Rurl=http://money.cnn.com/news/newsfeeds/articles/prnewswire/200810060800PR_NEWS_USPR_____NY37073.htmcid=1254866699ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNELFpXR2Ean1bxmDaJVNGg_S_63EgWilliam Ackman to Speak About Pershing Square#39;s bInvestment/b in Wachovia/a font size=-1 color=#6f6f6fnobrCNNMoney.com (press release)/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/2-3fd=Rurl=http://www.streetinsider.com/Insiders%2BBlog/Guess%2BAckmans%2BFirst%2BInvestment%2BIn%2BThe%2BFinancial%2BSector%2BIn%2BFive%2BYears%253F/4046095.htmlcid=1254866699ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNG1xklRnpvJTWWQLQCacrWjGlOOggGuess Ackman#39;s First bInvestment/b In The Financial Sector In Five Years?/a font size=-1 color=#6f6f6fnobrStreetInsider.com (subscription)/nobr/font/fontbrfont size=-1 class=pa href=http://news.google.com/news/url?sa=Tct=us/2-4fd=Rurl=http://www.streetinsider.com/Insiders%2BBlog/Pershing%2BSquares%2BAckman%2BIs%2BExcited%2BAbout%2BAIG/4046187.htmlcid=1254866699ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNFq6KPL96E5v9HdcCdJY4_W3GAclAnobrStreetInsider.com (subscription)/nobr/anbsp;- a href=http://news.google.com/news/url?sa=Tct=us/2-5fd=Rurl=http://www.streetinsider.com/Insiders%2BBlog/Ackman%2BAnswers%2BA%2BQuestion%2BOn%2BSears%2BHoldings%2B(SHLD)/4045922.htmlcid=1254866699ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNHx6h9GXUoK2nq9n70qquIDPrMEzwnobrStreetInsider.com (subscription)/nobr/a/fontbr/font class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1254866699hl=ennobrall 14 news articles/nobr/a/font/div/font/td/tr/table

More comments from Carl Icahn from the Value Investing Congress: - StreetInsider.com (subscription)

Tamarack Funds Announces Participation in US Treasury Department#39;s ... - MarketWatch

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Rich Japanese firms investing abroad - Minneapolis Star Tribune

Sustainable investing to get boost from tie-up-PRI - Reuters

Elliot Gue Hosts Premier Interactive Online Investors#39; Energy Summit - MarketWatch

Value Investing#39;s a No-Go for Now - TheStreet.com

The Wallet covers the latest personal finance and investing news ... - Wall Street Journal Blogs

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/9i-0fd=Rurl=http://blogs.wsj.com/wallet/2008/10/06/loose-change-10608/%3Fmod%3Dgooglenews_wsjcid=0ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNHHJpkn2Dwz8MbAT0GA_s8YDWOxkgimg src=http://news.google.com/news?imgefp=PCL2sx5_GbIJimgurl=s.wsj.net/media/super_art_200v_20081006093527.jpg width=56 height=80 alt= border=1brfont size=-2Wall Street Journal Blogs/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/9-0fd=Rurl=http://blogs.wsj.com/wallet/2008/10/06/loose-change-10608/%3Fmod%3Dgooglenews_wsjcid=0ei=2QPrSPXYLqSeygT4qeyOCQusg=AFQjCNHHJpkn2Dwz8MbAT0GA_s8YDWOxkgThe Wallet covers the latest personal finance and binvesting/b news b.../b/abrfont size=-1font color=#6f6f6fWall Street Journal Blogs,nbsp;NYnbsp;-/font nobr16 hours ago/nobr/fontbrfont size=-1b.../b consumers offer up more and more valuable goods to shops. [NPR] -A new type of binvestment/b is gaining muscle in the global economy - comic art. [Portfolio]/font/div/font/td/tr/table

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