In a circular that was related to stock market investing, Mr. Scott Berglund wrote for Barrons magazine in April, 2002 that many mutual fund managers were predicting stock market returns of eight to ten percent for the next eight years. He attempted to refute those statements rationalizing that the market logically would not be able to sustain those returns.
In a review of the past eight years, we find some interesting results. The stock market hit a high 28.72 percent return in 2003 and a low of negative 37.22 percent return in 2008. If you begin the analysis in January, 2003 and end it on December, 2009, the average return for this period of time was 7.92 percent. This was pretty darn close to the eight percent returns being touted by the analysts. The problem is that you would have a mighty rough rollercoaster ride. If you had stuck with an investment in an S & P 500 index fund, you would have achieved the discussed return.
The problem with most investors is that they do not stay on the ride. They tend to jump off as the coaster car is going down. This is generally just before the start of the next hill. I know it is not pretty, and it requires little effort on your part but the best advice an investor could take would be to invest their money in an index fund and forget about it.
If you are checking your investments more than once a year, you are checking them too much. After you have properly determined your optimum mix of the different asset classes, according to your risk meter, then you should invest your funds in the proper index funds to achieve the desired investment strategy. You do not need to take so much effort in trying to predict stock market returns. The greatest amount of effort should be spent in determining your diversification strategy and then sticking to it.
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Stock market trading is always hard to predict its next move! Investors must prefer learning stock market investing via books,magazines,articles and some free tutorials when they want to invest in stocks. Because by learning, they can have the information on the pros and cons and easily succeed as a stock market investor!