Last edited Sun Jul 26, 2020, 10:14 PM - Edit history (4)
can be relied on to say what's going to happen in the future. Not sure how 401ks and computer trading keep downturns and recovery periods shorter, especially the latter that has sharply exacerbated many downturns. As someone who has developed software and spec'd and tested much more, I'm not at all comfortable with a computer-algorithm run market or economy. As for institutional investors, when weren't they in the game?
Jane Bryant Quinn was extrapolating from previous years, unless I missed something. Leaving out the incovenient years that I acknowledge were further in the past (well 7 years further in the past - I'm starting in 1966, she started with 1973). I've never been that impressed with her anyway -- she's great at parroting conventional wisdom pablum, but wasn't all that deep as I noticed in some letters when she did have a back-and-forth with some readers. And sometimes biased -- sometimes I felt like I was reading polemics trying to sell me on her point of view, rather than useful information and analysis.
I wouldn't discount the Japanese experience either. Yes, I know they are "different" and "not us" and "foreign". But so far they haven't elected an evil madman, at least not post-WWII.
I've long posted here many many times about the superior record of equities (including just yesterday in this incredible subthread about the "safety" of gold ), and for buy-and-hold, buy-and-hold. But I've always kept in mind that its not a sure bet (e.g. short recovery times) either.
I do remember one thing: back in the 2000's, all the smart people, based on past experience of course, and pointing to all the fiscal and monetary stabilizers that we have compared to say the Great Depression era, told us that housing prices never go down on a national basis (as opposed to some local markets at times), because they never had, so we didn't have to worry about bundled mortgage securities because they were diversified nationally. We saw what happened to that little truism back in 2008.
All's I'm saying is that anyone who thinks they don't have to plan for the possibility of a recovery period longer than 10 or 15 years based on a few sample points (less than 10 bear markets) may well have some regrets.
Two fallacies often made in forecasting the future:
1. Because something has been true in the past 50 years, it will always be true in the future.
and the opposite but also very common fallacy (also present in the arguments that long recovery times are a thing of the past):
2. This time is different
During the dot-com era, earnings didn't matter, as long as there were enough eyeballs attracted and buzz.
We learned from that experience. Maybe. I hope.
Now we're entering an era where apparently present and future P/E ratios don't matter.
Where an out-of-control pandemic with counter-productive national leadership doesn't matter.
Where an economy and a stock market boosted by $3 trillion deficits and unlimited money creation and lending is considered OK as long as the stock market goes up (a circular reasoning situation that can't last forever)
Not sure how that's going to work out.
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