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Contrary Indicator?
#17
I'm confused Sad

Allow me to to present 2 scenarios which I think are likely:

Let's assume the market will rise another 5% and then fall 10% in 6 months (which I think is realistic)

Scenario 1:
I purchase stocks worth of $10,000 in companies with yearly dividends of 3% today and growth potential.
During the next 6 months the stocks rise for 5% to (10,000+500=) $10,500 and I receive dividends of 1.5% totaling $150.
After 12 months the stock market dives the 10% and my stocks are worth (10,500-1,500=) $9,000
Add to that the $150 dividends and my net worth is $9,150.

Scenario 2:
I stick to mutual fund based on bonds (like I did in the past decade) with valuation decrease of 1.2% and gain 3% yearly interest without growth potential.
After 6 months my bonds are worth (10,000-60=) $9,940 and I received interest of 1.5% totaling 150$.
My net worth at this scenario is (9,940+150=) $10,090.
At this point I can purchase more stocks from the same companies I had in scenario 1

Am I missing something in my calculations?

I punched in the following numbers in an excel worksheet:
1. stocks value increase 5% per year. (what I expect from the stocks)
2. Dividend rate 3% (what I expect from the stocks)
3. Bonds value decline of 1.2% per year (what I have now)
4. Bonds interest rate 3% (what I have now)
5. A dive of 10% in stock price at the (semi-)near future.

According to my calculations if the stock market will dive those 10% before February 2016 than I'm better off sticking with bonds.
At February 16th my 'stocks scenario" net worth will be $10,327.91 while my "bonds scenario" net worth will be $10,321.67.

If I'm reading this right than I need to decide if I believe that the market will take the 10% dive within 19 months from today or not.

So my question is, with the market as it is now, who believes it'll take a 10% dive in the next 18 months?
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Messages In This Thread
Contrary Indicator? - by TomK - 05-28-2014, 09:47 AM
RE: Contrary Indicator? - by WRXodus - 05-28-2014, 10:23 AM
RE: Contrary Indicator? - by Dividend Watcher - 05-28-2014, 12:19 PM
RE: Contrary Indicator? - by Kerim - 05-28-2014, 05:04 PM
RE: Contrary Indicator? - by rnsmth - 05-31-2014, 10:20 PM
RE: Contrary Indicator? - by Kerim - 06-01-2014, 08:28 AM
RE: Contrary Indicator? - by daat99 - 06-01-2014, 04:38 PM
RE: Contrary Indicator? - by Kerim - 06-01-2014, 05:27 PM
RE: Contrary Indicator? - by daat99 - 06-01-2014, 11:57 PM
RE: Contrary Indicator? - by Ok Red - 06-01-2014, 05:39 PM
RE: Contrary Indicator? - by kayboy - 06-01-2014, 09:29 PM
RE: Contrary Indicator? - by earthtodan - 06-01-2014, 10:40 PM
RE: Contrary Indicator? - by Dividend Watcher - 06-02-2014, 10:46 PM
RE: Contrary Indicator? - by EricL - 06-02-2014, 09:00 AM
RE: Contrary Indicator? - by ChadR - 06-03-2014, 10:51 AM
RE: Contrary Indicator? - by Dividend Watcher - 06-03-2014, 09:51 PM
RE: Contrary Indicator? - by daat99 - 06-04-2014, 04:24 AM
RE: Contrary Indicator? - by TomK - 06-04-2014, 08:16 AM
RE: Contrary Indicator? - by TomK - 06-24-2014, 08:36 AM
RE: Contrary Indicator? - by Dividend Watcher - 06-24-2014, 10:14 AM
RE: Contrary Indicator? - by Slowlife - 08-21-2014, 04:42 PM
RE: Contrary Indicator? - by EricL - 08-21-2014, 04:52 PM
RE: Contrary Indicator? - by Slowlife - 08-22-2014, 08:39 AM
RE: Contrary Indicator? - by NilesMike - 08-22-2014, 09:04 AM
RE: Contrary Indicator? - by daat99 - 08-24-2014, 11:11 AM



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