There Is No Alternative to Equities. (At Least Until the Facts Change.)

[Steelrolled]

TINA is about to face a big test.

TINA—There Is No Alternative—is a popular Wall Street acronym describing a key reason why equities remain so popular. Put simply, TINA says that investors will buy equities because all other investment opportunities are worse.

Over the past few months, TINA has powered a strong recovery of global equity markets. Central bank easing in response to the pandemic-induced recession pushed government and corporate bond yields to historic lows. In all major markets, government bond yields are now well below expected rates of inflation.

https://www.barrons.com/articles/tina-is-looking-vulnerable-beware-market-group-think-51593429300

[doc03]

1. It's been that way for years there is nowhere to

put money other than in stocks. Banks pay nothing and bonds pay nothing.

[progree]

2. SUBSCRIBE NOW to find out more! Only bozos and losers don't subscribe to Barrons

Last edited Wed Jul 1, 2020, 03:08 AM - Edit history (5)

Edited to add: too bad, darn. I'm dying to know what they think is going to change (as far as long-run outlook, I'm not interested in trends that last only a few years at most). There's a hint in the URL that there might be trouble in paradise:

tina-is-looking-vulnerable-beware-market-group-think

I do remember that it took the Dow 25 years to recover after 1929, and it took 16 years to recover after 1966, and so..

and then there's the Nikkei 225 that was 39,000 or thereabouts at the beginning of 1990 (it closed today at 22,288, so after 30 years its still 43% below where it was)

So there is no guarantee that downturns last only 4 - 6 years or so (from peak to new peak), like we might be assuming based on the U.S. market crashes we've had since the 70's.

NEW EDIT: OK, I read it, the very light gray on white version I'm not supposed to read, and probably damaged my eyes worse than a good dose of Covid would my lungs. But anyway...

If I had a rental property and the roof blew off and the tenant took off, the fact that bond yields are low would not make up for the loss of valuation. Similarly stocks -- there is a point where declining earnings and yields will impact the group-think.

That this point might have arrived is that the S&P 500 fell last week from 3118 on Monday June 22 to 3009 on Friday June 26 (a drop of 3.5% whoop-de-doo)

The article is dated Monday June 29 7:25 AM, so the authors didn't see (at the time they wrote the article) that it has gone back up the last 2 days back up to 3100, so it is essentially back to where it was a week ago. And in the face of increasingly bad Covid news. Oh well. Life sucks and then you die.

[bucolic_frolic]

3. I'm going on the theory that the best alternatives

are trading profits, usually while hedged or from hedges, and dividends, often in ETF form. But neither is bullet-proof from market downturns, crashes, or unexpected events. Note that both provide short term cash flow. Honorable mention to super growth stocks that become the next FAANGer, but diversity is a consideration.