Ask Mohan about the Market Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Ask Mohan about the Market

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Jyoti sharma who wrote (13403)	1/25/1998 10:56:00 AM
From: tekgk	Read Replies (2) of 18056

The post article makes the assumption that buy and hold always works out in the long term. This idea is not quite as true as the writer imagines. For an older person or someone with health problems who does not expect to live more than 25 years investing the stock market may not be the best idea at this time. In constant currency units there were three declines in this century lasting 12 years or longer and recovery back to the peak took an average of 25 years. Although this century has been one of rising stock markets in the US even in constant currency units when viewed from a > 1/4 century time frame the same is not true for maturing economies in general. An example to consider is France: In real terms, the stock market index for France is 45% below its 1916 peak. Another fine example is Italy; if you invested in Italy and reinvested all dividends for the past century and paid appropriate taxes not only would you have lost all of your money (constant currency units) but you would have found that it cost you to participate in that market. Do I believe that we are a France or Italy? NO, but the mindless assumption that markets always go up is stupid. There are some tell tail signs that we are a maturing economy that is going to eventually destroy it's currency. Since 1942 we have devalued the dollar by about 92%. This was during times of strong growth in an economy that was not burdened by large government and fiscally unsound social programs. We are currently squandering excess social security payments on current consumption. As the baby boom reaches retirement and the surplus turns into a deficit, the government will pay in devalued currency units. I don't believe that any other solution is politically possible. The resulting losses in the markets will be almost as horrendous as Italy. Since the 30 year bond pays almost the same interest as a short term T-Bill one has to assume that the average investor believes that there is no risk in the US for at least the next 30 years. I wonder where these people think the trillions needed to pay retirement benefits will come? I know - the stock market will continue to rise at 30% rate and we will all be billionaires and won't care. -g- Latest data from the fed: MONEY STOCK AND DEBT MEASURES (seasonally adjusted annual rates) Past three months M3 10.0% Kind of brisk for an economy growing at a 2-3% rate BWDIK.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next