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I have an acquaintance, in broad terms a reasonable man, who is utterly convinced that the US stock market has been overvalued since around 1994... that would be 30 years. He believes that the nadir of March 2009 was insufficiently low, that the market today belongs at around the level where it was in the late 1990s, and that all of our recent "corrections" were woefully insufficiently correct. His argument isn't Marxist, doomsday-prepper or millenialist, but on what he deems to be bedrock principles of stock market valuation. He thinks that what we need now, isn't even another "lost decade", but maybe a lost 20-30 years, so that maybe by 2050 or so, the market will have then recovered, to a more reasonable level. His own solution is a mix of around 90% invested in US T-bills, and the remaining 10% in speculative options, such as writing naked puts, or covered calls.
We see such sentiment frequently. Sometimes it's based on fringe speculations, or just desire to sensationalize and to taunt. But other times, as in the case of my acquaintance, it's a genuinely held belief, that those of us who buy-and-hold, who dollar cost average and so on, are purblind adherents to a lost cause. By this reckoning, the past two years, are only a modest foretaste, of the greater calamity to come.
My own view isn't to embrace such skepticism, or even to bestow upon it a respectful agreement-to-disagree. Instead, I merely note, that those of us who do buy-and-hold, have to be prepared not only to face multi-year periods of stagnation, but also the naysayers... and that even over quite long periods, those naysayers will appear, at least superficially, to be right.
This acquaintance of yours sounds pretty stupid when it comes to investing. He's not unique. My sense is he has missed out on massive gains for decades and, like others, tries to intellectualize an extremely dour case for the future as a way to hopefully tell others "I told you I was right". I'm sure there are dozens of newsletters out there that reinforce his beliefs as well. Those authors make boatloads feeding off such fears.
This acquaintance of yours sounds pretty stupid when it comes to investing. He's not unique. My sense is he has missed out on massive gains for decades and, like others, tries to intellectualize an extremely dour case for the future as a way to hopefully tell others "I told you I was right". I'm sure there are dozens of newsletters out there that reinforce his beliefs as well. Those authors make boatloads feeding off such fears.
the gold bug newsletters i used to get in the 1980s thrived on that stuff ..paint as gloomier picture as you can , then hope it plays out .. needless to say they are gone
Not sure why people fixate on this notion. Measuring returns over the past 2 years is utterly pointless. We had one very bad year (2022) followed by a very good rebound year (2023) and are now back to equilibrium. 2022 was an outlier. Sometimes markets correct for 1-2 years. Every decade has periods like that. We could have said the same thing in 2010, after a terrific year in 2009, that stocks were not even back to 2007 levels. What good did that do? Markets kept rising exponentially thereafter. Unless you believe S&P 5000 is the peak and we are facing a decade-long stagnation like the 70's?
I look at what I had when I retired, vs now. I’m not “fixated” on it, it just so happened that my retirement coincided with the downturn, when my contributions ended so all my projections were based on that point forward. In another year, I’ll still be comparing back to when I retired. Same in 5 years.
This acquaintance of yours sounds pretty stupid when it comes to investing. He's not unique. My sense is he has missed out on massive gains for decades and, like others, tries to intellectualize an extremely dour case for the future as a way to hopefully tell others "I told you I was right". I'm sure there are dozens of newsletters out there that reinforce his beliefs as well. Those authors make boatloads feeding off such fears.
Yes, very much so. In a similar vein, he asserts that paper-assets are to some extent all a mug's game, and that only hard assets - principally real estate, or actual physical businesses owned outright - are actual wealth. Thus he laments not having gotten into real estate, mostly because he's too busy with his day-job, and unwilling to trust a third-party. However, he's not a gold-bug, instead viewing gold as another speculative asset, dependent on perception and fashion, rather than real needs, the servicing of which, can be monetized.
In the very broad sense, say a time-scale of centuries, my acquaintance is optimistic. He doesn't believe that in the 22nd century, we'll all be eating grass, and whacking each other with wooden clubs. He's optimistic about nuclear fusion as a sustainable energy source, about real cures for cancer, and longevity-enhancement. But to your point, having largely missed out on stock market gains over the past 20-30 years, he's convinced himself that we're headed for historically subpar returns over the next 20-30 years. He is projecting his own dearth of success, onto a cosmic one.
If you pass a million, shouldn't you look towards 1.1? 1.2? 1.3? 1.4? etc etc etc?
Isn't it a goal depending on one's age to see that number eventually keep going up, passing milestones?
Of course there will be down years and crashes, but shouldn't long term investors look for high points unless one is near the end and spending down?
i love high points .
but i dont benchmark against them , it isn’t realistic to let some momentary point in time be the yardstick for portfolios that have been invested for years .
we would never expect to sell a stock at a high ….
if a stock went to 80 and you paid 50 and sold you would be thrilled .
but if it went to 100 and you sold at 80 after it fell and you were afraid of losing more you wouldn’t be so happy
so most like to judge how they are doing compared to that high .
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