Numbers don't lie, people do

Parent Cafe
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<p>And stock prices don’t lie, people do…</p>

<p>A couple of sayings I like quite a bit.</p>

<p>So…this thread is going to be about nunbers. No political comments. No politiciqns mentioned.</p>

<p>If any posts have political comments, I hope they are eliminated without touching the thread.</p>

<p>We all hear and read plenty. Do the numbers match the reality? What do the numbers say? </p>

<p>Say it with numbers. </p>

<p>Ok…I will start…</p>

<p>“In 2010, total compensation and benefits at publicly traded Wall Street banks and securities firms hit a record of $135 billion, according to an analysis by The Wall Street Journal. The total is up 5.7% from $128 billion in combined compensation and benefits by the same companies in 2009.”</p>

<p>Apple » Market Capitalization » 1997</p>

<p>$2.3 billion</p>

<p>Apple’s market cap today…</p>

<p>346.78 billion</p>

<p>If apple stock had the same up move over the next 14 years</p>

<p>I have to leave so I am not doing the math…</p>

<p>More than $51 trillion…</p>

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<p>You only have two points, what are you assuming, linear or exponential?</p>

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<p>Believe me, its like hell to justify buying Apple in 1997… Looking backwards is really easy, not forwards.</p>

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</p>

<p>Exponential, but it doesn’t really matter how many points you have when you can do a polynomial fit with whatever future behavior you want.</p>

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<p>Retirement sites are sticking with “assuming 8 percent appreciation, compounded annually …” In the most recent ten-year period 9/4/2001 to 9/4/2011 the S&P 500 has moved from 1155 to 1174. I’m no good with math. Is that somewhere near eight percent annual growth?</p>

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<p>The stock market is more than 50% lower than it would be if it achieved 8% compounded growth. That’s pretty close. :)</p>

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<p>^ Just 50% lower? That’s well within an order-of-magnitude error. I’m good.</p>

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<p>

More like 0.16%?</p>

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<p>The inflation calculator.</p>

<p>Between 2000 and 2010…this calculator comes up with inflation of 25%.
[The</a> Inflation Calculator](<a href=“http://www.westegg.com/inflation/]The”>The Inflation Calculator)</p>

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<p>Are you a saver or a spender? I have no idea how valid this is…</p>

<p>"HOW TO DETERMINE IF YOU’RE WEALTHY</p>

<p>Whatever your age, whatever your income, how much should you be worth right now? From years of surveying various high-income/high-net worth people, we have developed several multivariate-based wealth equations. A simple rule of thumb, however, is more than adequate in computing one’s expected net worth.</p>

<p>Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.
For example, if Mr. Anthony O. Duncan is forty-one years old, makes $143,000 a year, and has investments that return another $12,000, he would multiply $155,000 by forty-one. That equals $6,355,000. Dividing by ten, his net worth should be $635,500. If Ms. Lucy R. Frankel is sixty-one and has a total annual realized income of $235,000, her net worth should be $1,433,500.</p>

<p>Given your age and income, how does your net worth match up? Where do you stand along the wealth continuum? If you are in the top quartile for wealth accumulation, you are a PAW, or prodigious accumulator of wealth. If you are in the bottom quartile, you are a UAW, or under accumulator of wealth. Are you a PAW, a UAW, or just an AAW (average accumulator of wealth)?</p>

<p>We have developed another simple rule. To be well positioned in the PAW category, you should be worth twice the level of wealth expected. In other words, Mr. Duncan’s net worth/wealth should be approximately twice the expected value or more for his income/age cohort, or $635,500 multiplied by two equals $1,271,000. If Mr. Duncan’s net worth is approximately $1.27 million or more, he is a prodigious accumulator of wealth. Conversely, what if his level of wealth is one-half or less than expected for all those in his income/age category? Mr. Duncan would be classified as a UAW if his level of wealth were $317,750 or less (or one-half of $635,500)."</p>

<p><a href=“The Millionaire Next Door”>The Millionaire Next Door;

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<p>Inflation vs treasuries and the fed funds rate.</p>

<p>[Treasury</a> Yields in Perspective](<a href=“http://advisorperspectives.com/dshort/updates/Treasury-Yields-in-Perspective.php]Treasury”>http://advisorperspectives.com/dshort/updates/Treasury-Yields-in-Perspective.php)</p>

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<p>I don’t know if these charts are indicating future good news…but I like them.</p>

<p>[WAIT:</a> Some Really Good Economic News That Should Actually Make You Happy](<a href=“http://www.businessinsider.com/a-few-things-to-be-bullish-about-2011-9]WAIT:”>WAIT: Some Really Good Economic News That Should Actually Make You Happy)</p>

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<p>Gold is $1,884 per ounce. 10 or 11 years ago, it was $250 an ounce. Not too bad considering it’s just a rock. Silver has done even better. $4 to $43 - again, just a rock.</p>

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<p>

Dstark, for a married couple, would this be per person, or for both? Also, if some of your worth is coming from increases in equity are those counted as household income, even if it isn’t on your Adjusted Gross Income?</p>

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<p>An interesting figure to illustrate past growth but that’s about it.</p>

<p>$51 trillion is more than the total market capitalization of all publicly-traded companies in the world combined. Assuming its shares authorized doesn’t increase from 1,800 million, that would mean a stock price in excess of $28,000 per share. This is Apple, Inc., not Berkshire-Hathaway.</p>

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<p>people born in 56 will be 56 in 2012. Those of us born in 53 were 53 in 2006.</p>

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<p>^so true, unless the title of this thread is correct and people lie about their age!</p>

<p>Seriously, I cannot follow most of the comments on this thread. Is the rant against models for stock valuation? Expectations for earnings? Disappointment in “name brand” stocks that posters have purchased? Does anyone do rigorous analysis before they buy a stock, or do they just look at what they’ve been buying lately (i.e., lots of Apple products) and buy stock in that?</p>

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<p>In the old days, I used to read about drill results, cash costs, environmental issues, etc. when looking at mining companies. I would have done just as well buying the larger juniors and just holding on for the last decade.</p>

<p>One thing that I do now more often is to rely on others that know more about particular industries and companies than I do. We share information on our own areas of expertise to come up with candidate companies.</p>

<p>I have no idea what the idea of this thread is. It just has something to do with stock prices and numbers. I was tempted to post something like 1 + 1 = 2.</p>

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<p>“Dstark, for a married couple, would this be per person, or for both? Also, if some of your worth is coming from increases in equity are those counted as household income, even if it isn’t on your Adjusted Gross Income?”</p>

<p>Married couple. I wouldn’t count the increaes in equity as part of your income…
It’s just a guide. Take it with a grain of salt.</p>

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<p>I find this interesting…</p>

<p>If I buy a stock and sell it 11 months later, it is a short term capital gain. If I buy a future and sell it in 12 milliseconds, 60 percent of the gain is taxed as a long term capital gain.</p>