Simple wealth, inevitable wealth : how you and your financial advisor can grow your fortune in stock mutual funds by Murray Nick 1943-

Author:Murray, Nick, 1943-
Language: eng
Format: epub, pdf
Tags: Stock funds
Publisher: Mattituck, NY : Nick Murray Company, Inc.
Published: 1999-08-05T16:00:00+00:00

guistic reality-distortion field implies that those investments most likely to limit fluctuation, i.e. to hold nearly constant the number of currency units you own, are “conservative.” By the same fatally flawed cultural reasoning, those investments subject to great variability in price (i.e. they can go down a lot in the short to intermediate term, which is what frees them to go up a lot in the long term) are to be regarded as “speculative.” I’m hoping you already realize that it’s the other way around.

What should a truly conservative investor be laboring to conserve? Why, his money, of course. And what, to the long-term/multigenerational investor, is money? Right again: money is purchasing power. Therefore, those investments are genuinely conservative which most reliably and consistently maintain (and even increase) their owners’ purchasing power. Stocks are conservative.

What is a speculative investment? I would say it is one which has the possibility of a favorable outcome, but also carries the very real - and not at all unlikely - possibility of an unfavorable result.

Bonds will conserve money (as we now define it for the long run) only if the currency holds or increases its purchasing power. That is, bonds will maintain purchasing power if there’s zero inflation, and will increase purchasing power if there’s deflation. Judging by the experience of the twentieth century, this isn’t just a speculative posture. It’s a very long-shot bet.

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