The Ten Percent Solution

 

telligence, and an eye for value. We don't need any of them. We buy every month.

"Cathy, you mentioned 'the crash' a few minutes ago. On one day, October 19, 1987, the market lost nearly a quarter of its value. Do you know how long it took the market to regain its pre-crash level?"

"Five years?" guessed Cathy.

"About two years," Roy corrected her. "Does a steep decline like Black Monday hurt our holdings? Sure it does. But the market will bounce back. It always has. And while it's down, we're picking up shares at rock-bottom prices—a lot of shares, thanks to dollar cost averaging."

"I guess the fact that mutual funds are long-term in-vestments isn't a problem either," Cathy mused. "We're going to be accumulating and holding shares for ten, twenty, maybe even thirty years. We are the consummate long-term investors. As you said, short-term downturns, even prolonged downturns, will work to our advantage, not to our detriment. This sounds great, Roy!"

"It is great, Cathy. And as far as mutual funds not being a glamorous investment, well, so what? After they've earned you good returns, you can use the profits to buy more exciting things if you want. . . such as the satellite dish I bought yesterday."

"Get out! Dave and I will be over tomorrow to watch the Tigers' game. Put a few on ice, will you, Roy?"

"I love you guys like sons, but if you ever come near my house, I'll call the police."

"Some father you must be," Tom pouted.

An intrigued Cathy pressed on. "What mutual funds should we buy, Roy, and how do we purchase them?"

"Good questions. You'll have more than five thousand