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Everyone is talking about the record highs of the Dow Jones Index (About 21,000) Considering a typical Bear Market will drop the index 30-40%, we could easily see the Dow drop below 1999 levels in the next few years. (16,590.34 in December 1999.) That was 17 years ago! And to think that a typical bear market could drop it below that figure puts the bull market in perspective.
It's cyclical and at an all-time high.
It's inflated.
A correction is in order.
People noting drops of 30-40% is common. No one really knows, IMO.
by all accounts we really are first showing the signs now in the economy and leading indicators of what we should have seen in the early part of a recovery .
it just took 8 years to get this far .
pessimism is very high for the markets with most thinking they priced to high . that is a good sign as markets do not end with such pessimism .
modern day recessions rarely start without energy prices soaring too .
so the jury is out on this old bull market . anything can happen .
these are some of the most uncertain times i have ever experienced as an investor in my 30 years .
while rising rates are usually bad for treasury's or gold , once the switch is thrown and risk is off again , the money flowing out of stock to safer havens can actually see the red headed step children soaring in value on the longer end , while the fed is raising the shorter end .
we saw that in 2007 when the yield curve actually inverted and short term rates were higher than long term rates . longer term bonds ended up soaring 40% .
so one thing is certain , going forward will be filled with surprises and conventional investing which bets only on prosperity may not be the best way as risk on ,risk off plays out .
pessimism is very high for the markets with most thinking they priced to high . that is a good sign as markets do not end with such pessimism
This has certainly been the least trusted bull market I've ever witnessed. All of the way back to 2010, when people were fretting about a "double-dip" recession.
I gather the 1980s were similar, with people thinking it was all over when the DJIA doubled in pretty short order after languishing for over a decade? I was only vaguely aware of the stock market in the early 1980s and certainly did not have any serious money to invest then.
This has certainly been the least trusted bull market I've ever witnessed. All of the way back to 2010, when people were fretting about a "double-dip" recession.
I gather the 1980s were similar, with people thinking it was all over when the DJIA doubled in pretty short order after languishing for over a decade? I was only vaguely aware of the stock market in the early 1980s and certainly did not have any serious money to invest then.
There's pervasive skepticism all around, whether the topic is the job-market, the stock-market, or really the overall fate of Mankind. Americans were once a sunny, optimistic people - almost naively, beguilingly so. Others spoke of risk and potential failure, while Americans would have non of it... Rosie the Riveter, roll-up-your-sleeves, can-do. Today it seems that Reagan's 1984 "It's morning in America" commercials would be dismissed as cloying obtuseness. Instead we have rampant conspiracy theories, a ceaseless parade of scapegoats, miscreants and traitors everywhere. The market is rigged, the election was rigged, the entrance-exams into the neighborhood kindergarten are rigged. We're all dupes and hapless sods, exploited and discarded.
What changed? Generational shift? The media? Technology? Why is every upward crawl in the stock market oh-so-obvious evidence of impending doom? Why is the prevailing wisdom, that stocks merely oscillate, and that there ought not in fairness or good reason be any discernible upward trend?
This has certainly been the least trusted bull market I've ever witnessed. All of the way back to 2010, when people were fretting about a "double-dip" recession.
I gather the 1980s were similar, with people thinking it was all over when the DJIA doubled in pretty short order after languishing for over a decade? I was only vaguely aware of the stock market in the early 1980s and certainly did not have any serious money to invest then.
You can chart equity mutual funds flows versus the market. It indicates where the retail money is flowing. Generally, they've been poor during this bull run until recently. During the bear market following the 90's bubble, money kept flowing in until near the lows in 2002. Some of it can be explained by changing demographics. The boomers are no longer in their peak saving years of 45-55 and the average investor age is over 65 and not early 50's. Some of it can also be explained by the very low yields on cash and bonds. Investors have to pull out equity to meet cash flow now.
The market can move irrespective of what the retail investors are doing.
. What changed? Generational shift? The media? Technology? Why is every upward crawl in the stock market oh-so-obvious evidence of impending doom? Why is the prevailing wisdom, that stocks merely oscillate, and that there ought not in fairness or good reason be any discernible upward trend?
How true. The experience of anyone born after roughly 1970 has been to witness a range-bound market. The recency effect?
Most of us only get to witness one or two secular bull markets during our adult lifetime. We could be in one right now... nobody can know for sure. But people today seems to entirely dismiss the possibility that stocks can climb upward for 10-15 years without little interruption.
How true. The experience of anyone born after roughly 1970 has been to witness a range-bound market. The recency effect?
Most of us only get to witness one or two secular bull markets during our adult lifetime. We could be in one right now... nobody can know for sure. But people today seems to entirely dismiss the possibility that stocks can climb upward for 10-15 years without little interruption.
Somewhat changing the topic, but does anyone have a link to a chart of US stock market performance since 1900, that includes both (1) dividends, and (2) adjustment for inflation? I've seen inflation-adjusted charts, but invariably they omit dividends, and dividends were a huge deal until the 1980s.
As some one born after 1970 (though just barely), but as a somewhat precocious child at the time, I was mesmerized by the upward trajectory of stocks in the 1980s. In 1987 I was in high school - not yet an investor, but several of my classmates were. The crash of 1987 was a shocking news-item. My parents used it as a teachable moment, to impart the "wisdom" that stocks are a dangerous gamble, and that honest people keep their money in the bank. The lesson singed my reckoning at the time. But a few years later, when it was time to invest for myself for real, a helpful neighbor shared the long-view, that oscillations are inevitable, but so is long-term growth.
The 1980s and 1990s were a remarkable time. Several of our resident doomsday prognosticators, now unfortunately (or not?) banned, used to regale us with vehement rants on how the world changed in the year 2000, that that old world of handsome profits and sure ascendancy is forever gone. Our new world is a perfidious cabal of insiders who dispossess both the workers and the retail investors. Well, if we were having this conversation on a site based out of Europe, instead one out of the US, the conspiracy-theory would have some credence. Look at their markets and their economy. The immediacy of personal experience is hard to contravene.
I am sufficiently pessimistic, to suppose that for those of us who don't plan to live until 100, the 1980s and 1990s won't repeat. But I am sufficiently optimistic, to say likewise that back-to-back disasters like 2000-2002 and 2007-2009 won't repeat either, until I'm safely reposed in senescent dotage (unless my nurse, or possibly robotic nurse, disturbs my reverie by mentioning the stock market between doling out spoonfuls of apple sauce into my drooling mouth).
The long view is, I think, easier to espouse as we get older. No theoretical or anecdotal knowledge can really engender practical wisdom. We have to experience it for ourselves. Whoever started investing in 2000, would by 2010 think that it's all rigged and hopeless for the common-man. And why not? 10 years of patient investing, with net negative returns - while other people partied and bought boats and sports cars, enjoying their money. Where is the reward for eschewing instant gratification? But eventually it comes. It's not a 100X or 10X multiple, but it's enough to finally feel relieved, if not vindicated. Let us hope that this relief endures.
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