Virtually everybody I know has ridden all the way down from 14000. My father-in-law is finally getting an inkling about what I've talked about for years, but he's fully invested, and repeats the market dogma, "If I sell now, I'll have to take a loss."
I explained that if you *knew* the market would drop 50% from here, would you sell now? He moaned that there was little he could do, and he's right. He has TIAA-CREF, as I do. CREF lets you invest in national, or international stocks, and not much else. The domestic prices of the main stock fund was 217.61 on 03/24/00 and now it is 168.75.
CPI during this period is about 21%. Real CPI would be about 30-35%. Return over that period, -22%.
Net: About 1/2 to 3/5ths of the buying power from those dollars invested by March of 2000 has evaporated.
Japan looked even worse 9 years after their peak, too.
Dec of 1989: 39k
Dec of 2008: 8.7k
Surely the bottom after 9 worse than dead years, right?
Now: 7.5k. Another 10+ years, a further decline of 14%.
My main point though is that there *isn't* a lot of money from retail investors waiting to "rush in" as the purveyors of snake oil imply. There's a bit of money from not-busted hedge funds no doubt, but most retail money is still cringing in the corner as fully invested as ever, some having written it all off so they effectively are in denial now.
How much money entered the stock market each year as a consequence of the real-estate bubble, from 2nd mortgages and cash-out refis? All done.
The cresting of the baby boomer 401k plan inputs has likely passed for all time (weekly deposits from paychecks), for several reasons: more will opt for an MMF option; retirement is picking up steam; and many have lost their jobs completely. Translation -- the pump pump pump action from would-be retirees has diminished. |
