Forum Archive Index - March 2002

["Dick O'Connor" <callme_nz@hotmail.com>]

Thanks Hugh. One of the things that irks me about so many fund managers and 
financial advisers is that they often tell us how many millions we could 
have got from a particular fund by investing X dollars for Y years, but they 
nearly always forget to mention the Z part - the big adjustment that has to 
be made for inflation.

Here are a couple of quotes from the Charles Ellis book Winning The Loser's 
Game.

"From 1977 to 1982, the inflation-adjusted Dow went from 270 to 100 - a five 
year loss of 63%.

"In 1993, the Dow was equal to its inflation-adjusted level in 1928."

This a surely an edifying warning about the harm inflation  does - and 
perhaps also a warning about the risk there can be in an index fund.




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