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71 votes
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How safe it is in the long run to regularly invest in the stock market?

It's not pretending to be bulletproof advice. You'll certainly lose money some of the time. That's just how it is in the stock market. "Don't try to time the market" is advice that an average Joe can'...
Daniel's user avatar
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44 votes

How safe it is in the long run to regularly invest in the stock market?

An important point that is easy to miss: the chart you're showing appears to be a price index, this excludes dividends that were paid out over time. Look at the Nikkei-225 total return index (N225TR) ...
Ferb91's user avatar
  • 511
32 votes

How safe it is in the long run to regularly invest in the stock market?

Time in the market beats timing the market. The following graphics (from personalfinanceclub, found on reddit) do a great deal in explaining why this works well when you are only planning on saving, ...
Marv's user avatar
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26 votes
Accepted

Why does the Nikkei 225 appear to be such a bad long-term investment?

The Japanese economy has had a unique history, with a huge bubble in the 1980s and a long unwinding afterward. I don't see why that would result in a market that appears to have brief periods of ...
nanoman's user avatar
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24 votes
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Generally, Stocks move the index. Can index also move the stock?

The tail absolutely wags the dog in the equities markets. For a long time and this has been an active area of discussion. More pragmatically, market microstructure - such as an index or even hedging ...
CQM's user avatar
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23 votes

Generally, Stocks move the index. Can index also move the stock?

Per definition not - the Index is only a published number and when you add the price of certain things and report this number, the number can not change the price of the items. Now, if you have ...
TomTom's user avatar
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20 votes
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When trading indices, what are we buying?

Indices aren't physical instruments that you can trade, no. The most common way to "trade" an index is to buy shares of a mutual fund that tracks the index. Some mutual funds can fully ...
D Stanley's user avatar
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19 votes
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Why does VOO pay less dividends than SPY?

Do you see how VOO and SPY don't have the same price? Say you and I both start an S&P index ETF. For sake of easy paperwork, and to discourage small customers, you sell shares at a starting value ...
JTP - Apologise to Monica's user avatar
16 votes
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S&P 500 constituent holdings not proportional to market cap?

The weights of S&P 500 constituents are rebalanced quarterly (every three months). In between the rebalances, the ratio of index constituent weights may differ from the ratio of their actual ...
Flux's user avatar
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15 votes
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Understanding the past growth of an ETF

The currently accepted answer is incorrect. Vanguard is quoting the 1-year return as of 9/30/2019. This is calculated from the close of 9/28/2018 (the last trading day of September 2018) to the close ...
nanoman's user avatar
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14 votes

Do people who buy and hold individual stocks for longer than 10+ years have a much better chance of outperforming the market?

I even tried getting rid of the obvious massive tech winners and just relying on stocks like McDonald’s, Coca-Cola, Costco, j&j and GE You used survivor bias to pick your stocks. You picked ...
mhoran_psprep's user avatar
13 votes
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What marks the beginning of a bear market?

You can’t determine the beginning of a bear market at the time — if you could then it would immediately become a crash, as everyone would try to sell. It can only be determined retroactively, after ...
Mike Scott's user avatar
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13 votes
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S&P 500 Index Value

The S&P 500 index is a float-adjusted market-cap weighted index. It’s calculated by taking the sum of the adjusted market capitalization of all S&P 500 stocks and then dividing it with an ...
Bob Baerker's user avatar
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13 votes

How exactly does MSCI earn money?

MSCI is an "index provider". MSCI makes money from licensing its indexes. ETFs pay MSCI licensing fees based on the assets under management (AUM) and trading volumes of the fund. It seems ...
Flux's user avatar
  • 17k
12 votes
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Understanding how an ETF works

The prices of each individual stock are 100$ (A), 10$ (B) and 1$ (C). The index weights at this moment are 60% (A), 30% (B), 10% (C). In other words, for every 6 shares of A (initially worth $600), ...
Flux's user avatar
  • 17k
12 votes

Generally, Stocks move the index. Can index also move the stock?

The index is an average of the stocks in the index. A very simplistic index consisting of 3 stocks might be calculated as: (share 1 price + share 2 price + share 3 price) / 3 = index price In ...
thelem's user avatar
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11 votes
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How can you know which index is tracked by a specific index fund?

This kind of information can always be found in the Key Information Document (KID) The KID states: The Fund seeks to provide returns consistent with the performance of the Bloomberg Barclays ...
Ger's user avatar
  • 318
10 votes
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Does an index have a currency?

From Wikipedia - To calculate the value of the S&P 500 Index, the sum of the adjusted market capitalization of all 500 stocks is divided by a factor, usually referred to as the Divisor. ...
JTP - Apologise to Monica's user avatar
10 votes

How is the Dow divisor calculated?

Have you actually read the Wikipedia article? To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a divisor, the Dow Divisor. The divisor is adjusted in case of stock splits, ...
0xFEE1DEAD's user avatar
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10 votes
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How are Vanguard's ETF's returns higher than the index's growth?

Repost of comment as an answer (as per Chirlu's suggestion). The index does not take into account the dividends paid by the stocks in the index; the ETF does. So the ETF's return outperforms the ...
Dilip Sarwate's user avatar
10 votes

What marks the beginning of a bear market?

From Investopedia: Although figures vary, a downturn of 20% or more from a peak in multiple broad market indexes, such as the Dow Jones Industrial Average (DJIA) or Standard & Poor's 500 Index (...
DJClayworth's user avatar
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10 votes
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Can fundamental analysis be applied to market indexes as if they were single stocks/bonds?

In theory it is possible, but very impractical. So much so that it approaches the impossible. Also this does not make much sense. Assuming that it takes 100 hours to do proper fundamental analysis ...
Pete B.'s user avatar
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9 votes
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World Indexes - Variance between representation of a country's stocks and the country's proportion of world GDP

Stock market indexes are generally based on market capitalization, which is not the same as GDP. GDP includes the value of all goods and services produced in a country; this includes a large amount ...
BrenBarn's user avatar
  • 24k
9 votes

Understanding the past growth of an ETF

Google's numbers: 10/01/18 $268.04 09/27/19 $271.26 That's a gain of 1.20% which is far less than the actual return because Google did not account for dividends. During that period you would have ...
Bob Baerker's user avatar
  • 76.4k
7 votes

How safe it is in the long run to regularly invest in the stock market?

OP asked a great question! People've been using US stock market to justify auto-investment over market timing, passive funds over active management, etc. Well, not all markets are like this. ...
xiaomy's user avatar
  • 1,838
7 votes

Is investing in index futures better than investing in index funds?

I wrote up an article on exactly this strategy including how to execute it. The theory is sound, the strategy should work. And additional huge benefit of doing this is avoiding the 30% dividend tax on ...
Glorat's user avatar
  • 71
7 votes
Accepted

Is investing in index futures better than investing in index funds?

It is an interesting idea, but: The minimum capital required for an unleveraged index futures position is prohibitive for most individual investors. For example, a single S&P 500 E-Mini contract ...
nanoman's user avatar
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6 votes
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Is Nasdaq stock an ETF?

NDAQ is the ticker for stock in the company Nasdaq, Inc., which derives income from managing the exchange (transaction fees, listing fees, real-time quote feeds, etc). Here is their description of ...
Ben Voigt's user avatar
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6 votes

How safe it is in the long run to regularly invest in the stock market?

With foreign indexes (i.e. if your normal living expenses are not in JPY), you need to also take account the exchange rate between the currency the index is rated in and whatever currency you yourself ...
jpa's user avatar
  • 1,076
6 votes
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How do you read a Total Returns chart?

First, a few warnings (so that you know what to do if you decide to use in the future the series in the graph you have shared): The series in the graph is actually called "Nikkei 225 Total ...
Alper's user avatar
  • 816

Only top scored, non community-wiki answers of a minimum length are eligible