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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (76161)	12/20/2006 4:06:41 AM
From: Mike Johnston	Read Replies (2) \| Respond to of 110194

That was mentioned on a financial talk show today. If the DOW doesn't average at least 6% a year in real terms for the rest of this decade then this first decade of the 2000's will be the worst ever in 'real' terms since the DOW was formed. Yes shocking it could be even below the 1930's or the 1970's That is totally wrong, what talk show was that ? It seems to me they are spewing nonsense. Between 1966 and 1982 the market lost about 75% of its value in real terms. That is negative return year after year for 16 years. Where did they get +6% being worse than 70's ? If we assume that the market has so far this decade lost 40% in real terms, then 6% return for the rest of the decade would bring the return for this decade to -30%. That is still much better performance than 30's and 70's. If we stick with official CPI numbers, performance difference is that much better in favor of 2000's. There is no way Dow can record real return of 6% in the near future, with flat GDP, high inflation and declining productivity. Even a 10% return in the stock market these days, if you account for taxes and inflation, you are losing money. As far as nominal returns, who knows, it depends on how much new money will be introduced into the economy. A lot of new money combined with a bid under a bond market and 20,30% or more nominal returns are possible. But that doesn't mean that the economy is in good shape. Look at Zimbabwe. The stock market went up 1500% last year and another 2000% this year. But the unemployment has reached 80% and there is mass starvation.