Does The Stock Market Give Investors The Best Returns?

Often we get told: “in the long run, the stock market is the best way to invest your money.”

We at NeverLossTrading agree and expand our view to the world financial markets:

• Stock Markets

• Bond Markets

• Commodities

• Currencies

Key to be a world financial market investor is to know how to make money in up, down and sideways markets.

Let us take a look how the US Stock market performed over the last 10 years to check and balance against the common theory of the stock market being the best place to invest.

We like to take the S&P 500 as key indicator: “The 500 biggest US-companies by market capitalization and measure the stock market success bases on those.” Here are some key companies of the S&P 500 and the referring industry sectors.

Industry Sectors Key Companies in the S&P 500

• Information Technology: Microsoft, IBM, Apple

• Financials: JP-Morgan Chase Manhattan

• Healthcare: Johnson & Johnson

• Energy: Exxon Mobile, Chevron

• Consumer: Procter & Gamble, McDonalds

• Industrial: GE, Boeing

• Utility: Exelon

• Telecommunication: ATT, Verizon, Sprint

• Materials: Monsanto

When we look at the closing of Friday July 2, 2010, we recognize that S&P 500 closed below the opening of the year 2010. Tracing back in time, we are now at the level of the year 2001 or even 1997.

In between 1997 and today we had good and bad years in the stock market and if we continuously invested, we have about the same money after 13 years with ZERO percent interest.

Is this a great way to build a retirement portfolio, putting money into the stock market and get Zero interest - if we were lucky and chose the right shares or mutual funds?

God forbid if we owned: Worldcom, GM, Sprint, Citi Group, Freddie Mac and so many others to name.

Hence, the answer to this is: NO, the stock market is not a safe haven for guaranteed income.

Based on our analysis, 75% of all shares and Mutual Funds develop in close relationship to the S&P 500. Surely some do better and others do worth, but 75% is good enough to say that the S&P 500 are the key instrument to measure market and investment success.

Why do we not take the DOW, which is what everybody on an everyday basis refers to as the stock market index. The DOW in its composition has 30 companies, one per industry sector. All Dow companies are included in the S&P 500. The Dow always sees changes in the structure and composition of the companies involved (GE is the only company which stayed in the Dow for the last 50 years, all others were changed out) and basically the DOW and the S&P move in the same increments, just on a different basis.

So what to do when we see that the stock markets are not giving us enough return to build up our retirement account as we planned?

First of all: Forget the traditional way of buy and hold: buy a stock today, choose a quality company and sell it later at a higher price. This it does not work anymore. Look at GE, a real quality company and it was clear that it the share price will go up when it was at $40, $35, $25, $15, $10 and now we are again at $14 and did even see $7 once.

Second: Learn how to leverage and protect your investments with methods that involve options and futures, so you are able to earn money if the markets go up, down or sideways.

Sounds unreal?

Let us jointly check it out:

Had we invested since the year 2000 a monthly amount of $100 into Microsoft shares ( a real quality company) we would own 473 Shares today and their today’s value would be: $11,011 while we had invested: $12,658. This is a minus 13% return on our investment over 10 years.

The same or even worth if you continuously invested in: Bank of America, DELL, Alcoa, Pfizer , Motorola, GE (all blue chip companies). When you own mutual funds, take a look at your statement and you most likely owned or own those companies.

Never Loss Trading offers you to learn in 3 days how to be a financial market investor. Depending on the frequency you want and can trade, you should strive to earn:

• 2-5% a month

• 2-5% a week

• 2-5% a day

Regardless in which direction the markets trade.

Check out the details at: http://NeverLossTrading.com to find classes for 401(k) holders, Market Investors, Forex Traders, Futures, Index, Commodities, Options and many more.

The future is in your hands, take the first step and learn to be a financial market investor.

If you do not care about your own money, nobody else will.