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Strategies & Market Trends : The Stock Market Bubble

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To: Tommaso who wrote (3185)	5/21/2000 11:25:00 AM
From: Dale Baker	Read Replies (1) of 3339

That's where investing becomes a macro bet on overall economic trends. The Dow chart from 1970 to 1990 shows stagnation through 1983, then the Dow tripled by the end of 1990. I don't see the US or world economies having the same vulnerabilities now as they did in the 1970's. That's why I go on about a different economic era that requires a different model to determine valuations. Obviously, if someone thinks the world hasn't changed, then a long period of stagnation in share prices is conceivable. It is interesting to note that the Dow moved from 800 to 1000 several times during the "stagnant" period, allowing a market timer to pick up several 25% gains if he was relatively nimble. And the long term buy and hold investor did no worse than flat for that period of time. The only other way to generate significant profits would have been real estate or a private business investment - if it worked. I ran the numbers to see my total return if my account stayed totally flat for the next seven years. It would still be a 15% annualized return over 10 years after the past three years' performance.

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