Mike,
you said,
<<Just thinking about how this market might be crazy, but maybe we're the
ones who are unrealistic and shortsighted. The current explosion is
unbelievable, but as most have already said, where are most people
going to put their money?
For the 25 year old who has grown up on the web/net, CNBC, cable
television, telephone, presidential impeachment (had to throw that in),
the stock market is and will be the place to invest for the next 25-40
years
The recent overspeculation may be foolhardy, but the buy and hold
investor in the year 2025 will have earned about 10-15% on his
investments, regardless of what the market is today and what it does
next year>>
IMO, the flaw in your argument is you are taking the past 25 years of above trend performance and projecting it over the next 25 years. It *may* happen, but I wouldn't bet on it.
Your argument is the same people made c. 1980 about oil prices, as folks on the thread have pointed out. People back then were looking at the previous 7 years and forecasting the same growth for the next few years. Someone who projected that oil prices, which had risen on the order of 500% in real terms over the previous 7 years, would fall over the subsequent 18 years to, in real terms, below the price before the oil crisis in 1973 would have had no credibility. None whatsoever, but they would have been correct.
Also, as some folks here and elsewhere on SI have noted, there have been two times this century when equity investments made at market highs wouldn't have recovered to the purchase price in real terms for a couple of decades or more (1966 and 1929).
Another thing that should give all of us more than a little awe and even fear is that we're at the crest of an equity market bubble that's an order of magnitude greater than that in 1929. Add to that a global economy, the only thing standing between us and a steep recession are the strong economies in the US and Europe ... oops, are those storm flags on the horizon?
Peter |
