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Kevin Hogan
Network 3000 Publishing
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Q & A

ask a question about persuasion, influence, body language

with Kevin Hogan, Psy.D.

Do YOU have a question? E-mail askkevin AT kevinhogan.com

Do you have a question for Kevin? Your question will remain anonymous unless you specifically ask us to post your name! If your question is published, your name will be submitted in a drawing for a gift certificate to be used in our catalog at any time. Dozens of gift certificates have been awarded - submit your question for a chance to win!

THIS WEEK'S QUESTION(S):



Question: Kevin your article on the stock market not returning 10.4% was misleading. I've been a financial planner for 27 years. You didn't include dividends or stock splits. I believe a cumulative return of 10% is right, over time. Would you be willing to post a correction? I know you have a lot of friends in the financial world who would like to see you correct your mistake.


Before I get to the numbers, I got a personal e-mail minutes ago, asking what I thought of 401K's and IRA's. Answer: If you don't have something like a 401 K, or an IRA or similar, you are nuts. You MUST have money stashed in these protected investments. In some states, your entire investment is protected in lawsuits and bankruptcy situations. In others they are partially protected when everything else you own is up for grabs. Finally, MAX out your 401K and IRA's. Not MINIMUM. MAX THEM OUT. Just because you aren't going to get rich with something doesn't mean it's not a helpful tool!

Answer: No correction necessary. Do the math! For goodness sake, how can people with computers mess this one up?!??! This article generated a lot of interest. OK... 1) STOCK SPLITS are factored into the indexes. (YOU should know that! 27 years?!) 2) Simple math.

a) about a century ago the DOW was at about 100 give or take. Using the "rule of 72" we know that if that returns 10% per year, it will double in 7.2 years. That would put the DOW at almost 2,000,000 in 2008.

b) the Dow is at 11,500 today.

c) What is the real return of the Dow starting about 100 and ending up where we are today if I state the actual return to your bank account is 5%?

d) 72 /5 = 14.4 (takes 14.4 years to double, got it?)

e) there are a bit over 7 doubles in 100 years at 5%.

f) 100,200, 400, 800, 1600, 3200, 6400, 12,800. The end.

g) The DOW has returned ALMOST 5% per year over the last 100 years.

h) remember to add 4% annually perhaps for dividends, take off 3% for inflation, knock another 1-2% per year for management fees at various levels. Knock off 1/3 or more for taxes when you withdraw. NOW, do you want me to really do that math here or should we just just accept that the DOW returned 1% of what we believed it should. (People are told 10.4% annually over time, but really that isn't true, in any sense.)

i) one final way to understand this.

I give you $100. It goes up 50% this year and down 30% the next year. That is an AVERAGE RETURN of 10% (50-30=20 /2 = 10). But average isn't REAL. Real is up to 150 from 100 and then down $45 from the 150, leaving you with $105.

I give you $100 and you earn 100% in year one, down 80% in year two. Average return is again 10% per year. REAL RETURN? 100 up to 200, down 80% takes off $160 and you have $40 left of your 100 for a REAL RETURN of about -30% or so per year.

Make sense?

If you get that, and can do slightly higher math, you can read a site like www.crestmontresearch.com and learn way more than my tiny brain can put out there. (He uses cool color coding, I just put stuff in text....)



Question: I recently had a chance to buy subliminal CD's but I passed because you said they can't work. BUT, the company who sells them says they know you. What gives?


Answer: There is 100% evidence to show that Subliminal CD's are 100% bunk and there is an approaching zero percent chance that one will ever work. To spend your money on a subliminal audio product is to throw your money to the wind.



Question: What question should I ask someone to find out whether they most desire, say, the security of a relationship, when they've never had a romantic relationship before?


Answer: You aren't going to find out in an answer. You will find out a lot in their behavior, however. Unless this person is quite young (teenage) they are experiencing fear, either real or imagined and there are certainly drivers that will buck up against those fears, but the fears need to be dealt with first. (Great question BTW)



More? Read about where to put your money, plus what's different about Releasing the Millionaire Inside...Go to page 2!



Continue: Page | 1 | 2 | 3 | 4 |




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Kevin Hogan
Network 3000 Publishing
3432 Denmark #108
Eagan, MN 55123
(612) 616-0732