Investor complacency is rampant. Advisors and managers who peddle harmful, self-interested, financial recommendations are hard at fresh marketing initiatives. The reckless are being foolishly revered and the business media are relentlessly helping to spin the web of folly. Remarkably, near a third cycle peak, 13 years into an ongoing secular bear market, most people remain immersed in a child-like understanding of market prices. Meanwhile capital risk to real people has doubtless not been this high since 2007.
Today the greatest risk is in acting as if the 50% market declines of 2001-03 and 2008-09 were unfortunate accidents or anomalies now behind us. The promise of fresh catastrophe lies ahead, as most still lack meaningful risk management strategies to protect capital from the ravages of the next cyclical bear market.
Those whose recommendations for constant equity allocations have devastated capital repeatedly since 2000 have been greatly encouraged by recent speculative advances. Their next victims follow hopeful and unsuspecting. Many will be harmed through ignorance. Many others though, have learned these lessons already. They should know better, but will succumb once more through various strains of impatience, ego, willful blindness and lack of personal discipline.
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So you’re not buying the idea that the secular bear just might be over? That’s what’s hard about what you guys do… trying to get that timing right is next to impossible.
There really is not limited to how high the DOW can go – as it is denominated in printed money. 20,000? 50,000? but it doesn’t mean much if a cup of coffee is $35. This simply benefits the wealthy – who can invest in larger quantities, but it crushes the middle and lower classes…. although the lower classes are now almost fully supported by Barry. In 1970 1 out of 50 Americans were on Food stamps…in the last few months another 600K making the total 47.7 million or 1 in 6.5. And they get a free cell phone.
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.” ― Alexis de Tocqueville (29 July 1805 – 16 April 1859)
This 14,000 DJIA must be killing you! nyuk, nyuk!
Better news! Russell Wassendorf Sr, former head of collapsed broker Peregrine Financial Group was sentenced to 50 years in prison, the maximum without parole. Old Russell, the dapper conman splashed all over the SFO Magazine I used to get is 64 years old. So he is nicely tucked away…thats good news. He swiped 215 million of customers funds, took them as his own, and then tried to kill himself in his automobile, but failed at that too and was found unconscious with his handwritten confession next to him. Not a stellar career, although I’m sure it was ‘fun while it lasted’.
No figuring out that the secular bear is not yet over is actually very easy when one studies the objective measurements on present conditions versus all the other secular bear bottoms in history. It is easy to see that we are not yet close. The hard part for most people is controlling the emotional urges to disregard evidence and move on a hope and a prayer.
Just curious how much you would have gained if you had stayed in the market since 2010?
RE: 14,000… do you mean the recent 14k… or the one reached 5 years ago?
What kills us, is seeing the human wreckage after the fact… investors having lost 50% of their equity TWICE in the last 13 years and still they put their faith in Bernanke, and just like Greenspan the business cycle continues on ( 70%+ of U.S GDP).
Bill Gross on world credit markets (Feb 1 G&M) …
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20130201/RBINSIGHTPIMCOCREDIT0131GLOBEWEBATL
… as Canucks take on even MORE debt (Feb 5 G&M)
http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadians-back-to-borrowing-as-average-consumer-debt-hits-new-high/article8182111/
Madness!
All depends what markets you are talking about and when capital was committed. Broad North American indices suffered huge volatility during 2010 and only managed to perform a little better than our bonds. Our bonds out-gained stock markets in 2011 by several percent as US indices were flat and Cdn TSX lost 10%. Broad markets out gained our bonds in 2012 by a few percent thanks to the final few months, but at much higher volatility and risk to capital. Meanwhile most market participants were also holding things like resources and gold companies in 2012 that lost between 50 and 20% respectively. So much worse than our bond holdings. Keep in mind what “the market” does is frequently irrelevant to individual experience. Its not what the market does, but what the individual keeps that counts. In real life, which asset allocation, when you put money and in and when you take any out, and how much volatility and risk you face along the way are all critical to assessing results.