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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (409)	6/18/1998 10:07:00 PM
From: porcupine --''''>	Read Replies (2) \| Respond to of 1722

I know. I'm not smart enough or creative enough to invent new ideas. I just try to organize in a consistent and coherent fashion some of what is known about the present and the past, and draw reasonable inferences accordingly. Many have been saying, from the beginning of the 90's, that the current trends are necessarily short term in nature. What I'm saying is that these trends can last for a generation or so, and I don't see any convincing reason why the present era will not last a similar length of time. I'm not saying it will last forever (it can't), and I'm not saying it can't end in an unpleasant surprise -- it just might. Some of the events you listed did just seem to fall out of the sky when they occurred. Others, though, were widely foreseen. A majority of people may have been in denial, but there was certainly an informed minority who loudly and clearly predicted the Civil War, from the day the U.S. was created, and WWII, from the day WWI ended. Interestingly, WWIII was also widely viewed as inevitable, but somehow no one ever got around to actually having it. And, as you know, the return of the Great Depression was widely predicted for about the first 15 years after the end of WWII. Both may yet occur, but that's an awful lot of money to have left on the table in the meantime. All of this supports your (well made and well received) point that 16 years into a Bull Market with well above-norm annualized price appreciation, there isn't a lot of margin of safety, anywhere in the system. Based upon numerous statements, I am sure Greenspan would also agree with you. Likewise Buffett, and, were he still alive, Graham. But, Graham, near the beginning of the Intelligent Investor, points out that 20 years of dollar cost averaging on the DJIA, starting in the worst possible year, January 1929, would nonetheless have yielded a very respectful 8% annualized, well ahead of cash, bonds, gold, or real estate. Based upon the past 200 years, for the long term conservative investor, I can't conceive of what would have more margin of safety than dollar cost averaging in a large cap indexing product.