Can the 17 year bear return?

[artillery77]

Originally Posted by stockwiz

It's possible, though I don't believe it would last 15 years without high inflation. We've come pretty far in the markets the last 10 years. It's hard to say how far we can get before the next recession. We have a debt to GDP ratio of 105% right now when it was around 35% in 1980. Inflation helps devalue the value of debt, but we also had a roaring economy and major population growth during this time, and many less government entitlement programs.

The big fear now will be how the governments (globally) will manage their expenses with lower birth rates, a larger aging populace, ever increasing benefits, and central banks still holding a large amount of debt on their balance sheets despite the fact we are nearly 10 years into an expansion and another recession is likely within 2 years. As you can see from this article, the ECB and Bank of Japan have still been propping things up over there...

https://www.marketwatch.com/story/st...uth-2019-01-05

I'm trying to wrap my head around this... we have a debt based currency, but if in theory the central banks merely act as the bond buyers of last resort and don't ever expect repayment, then is it really a debt based currency? Is the national debt meaningless? What implications would this have for the stability of the global economy?

Penniless Williams Presents

Bank on a Hot Tin Roof

So I walked into a bar yesterday, and I say....hey barkeep, what's the worst kindof customer? The guy says...oh that's easy. Central Bankers. Half want to pay with IOUs, I go to collect the IOU and they give me an IOU from another guy...and the other half wants water in a glass that we serve vodka in. None of the jerks has the money to pay me.

"Sounds awful. So, why do you do you put up with it?"

Barkeep says...

Oh that's easy. Two reasons.

1. I'm bored. I used to tell them to get out if they had no money....but with them hanging out crying it scared all the customers, finally I said fine come in.

"And 2?"

Oh I've been filling their glasses with water from the toilet for years, watering it down over time. They don't even know anymore, so it doesn't cost me anything. It's all water. And one day, once that big fella that hangs with them passes away, I'm going to demand their shiny cars to cover their tabs.

"Couldn't they just pay you the money?"

No, it doesn't exist.

"Whaaat? You can't just take everyone's cars!!!"

Hey, don't yell at me. I'm being nice. I haven't taken anyone's cars yet....but I could...whenever I want.

"Wow, why do they do it?"

Beats me, but look bub, I can't let you sit there if you ain't a customer. So either order or get outta here and get back in that blizzard.

"Right, I'll take a beer. You see, I do have money, here you are."

Here's your beer.
Oh, yeah, we don't take that paper here.

"It's all I've got."

Now look, you either pay me in my currency or that big fella is going to come up an tear off your head.

"This is outrageous."

Ok, look, you're new here. You got that nice shiny car over there. That's mine now. Now don't worry...you still get to drive it and your wife won't find out. And that's definitely worth a few beers...so be sure to stop buy anytime.

"This is a terrible."

Well, our customers love us on yelp. You can complain when you settle your tab and leave. Or, we can forget you ever said that, and let me introduce you around. Our club has many nice amenities you see.

"Wow, is that Raquel Welch...in her prime???"

She did say she hoped you'd become a member the barkeep said with a friendly relaxed smile. Do you really want to wonder home in that terribly cold blizzard...I assure you there's nobody out there. If you break down....whoooo

"Ok, I'm in. This place seems great. Just help me understand something."

Sure

"So how do you pay your suppliers, if nobody's actually paying you?"

Oh that's easy....I offer them a drink.

"What if they don't drink?"

This guy....what if they don't drink. They all drink. At a minimum they know someone that drinks.

But look, one day the sun is going to explode. When that happens, it's not going to matter if you're smoking a cigarette, or helping an old lady across the street.

"And you control that day?"

If you're lucky...yeah.

"So why haven't you done it already?"

I like to drink. <downs a glass of vodka>

"Eww, did you just drink toilet water?"

What do you think you're drinking?

"Stella"

Of course you are....have a fun time kid and try not break anything.

-The End-

Our bewildered CB has got to be in shock at how good things seem(ed) and how little room he actually has to maneuver. He's not going to get rid of that giant pile of balance sheet money. Soon he will realize he needs to look at other CBs and simply state that he's not monetizing, but the timing isn't right.

And those other CBs, with billions invested in it of value they can't use and no replacement in sight, are going to readily agree with him.

It's an economy of confidence. In God We Trust.

[mathjak107]

Originally Posted by mathjak107

It is always possible not to make money inflation adjusted but when inflation is well out side the normal range and returns are within their normal range you need to examine the culprit to see where the issue is ..

High inflation is never good for stocks and , stocks don’t keep up with inflation when inflation is high so it is inflation we need to be concerned about more than stocks returns over the long term

keep in mind inflation can effect things both up and down . the great depression recovered in dollars terms in just 4-1/2 years because the cpi fell 18% ..

many many many years later when the same numbers were hit again you were way way ahead of what the numbers showed because of the deflation .

so the wild card is inflation when it is out of bounds not stock returns .. even in the worst of times long term nominal stock returns are usually within 2% of each other over decades of time ..

here are the 30 year returns for the worst time frames ever for retirees . you can see they are pretty close to normal .

1907 stocks returned 7.77% -- bonds 4.250-- rebalanced portfolio 7.02- - inflation 1.64--

1929 stocks 8.19% - - bonds 1.74%-- rebalanced portfolio 6.28-- inflation 1.69--

1937 stocks 10.12 - - bonds 2.13 - rebalanced portfolio -- 7.24 inflation-- 2.82

1966 stocks 10.23 - -bonds 7.85 -- rebalanced portfolio 9.56- - inflation 5.38

for comparison the 140 year average's were:

stocks 8.39--bonds 2.85%--rebalanced portfolio 6.17% inflation 2.23%


however you can see if we look at the 15 year periods , it is the shorter term periods that caused the failures when spending down

1907--- stocks minus 1.47%---- bonds minus .39%-- rebalanced minus .70% ---inflation 1.64%

1929---stocks 1.07%---bonds 1.79%---rebalanced 2.29%--inflation 1.69%

1937---stocks -- 3.45%---bonds minus 3.07%-- rebalanced 1.23%--inflation 2.82%

1966-stocks minus .13%--bonds 1.08%--rebalanced .64%-- inflation 5.38%

[BeerGeek40]

There's always a bull market somewhere even in a 17 year bear market.

[mathjak107]

the last 90 days long term treasuries were up almost 8% and fidelity gold was up 12%

[BeerGeek40]

Originally Posted by mathjak107

the last 90 days long term treasuries were up almost 8% and fidelity gold was up 12%

Every battle is won, before it is ever fought.

https://www.youtube.com/watch?v=-TLCaDbBv_s