The chart had a large draw-down from 1973 to its bottom in late 1974. Throughout the decade, there were many corrections, but over time the markets actually appreciated. I'm sure many investor's fled the markets looking for safer returns. Problem is, this is what followed:
The 1980's were a great period for investing. The first few years were tough, but by 1983 until 1987, the markets moved vertically. Even the crash of 1987 was recovered quickly and new highs were achieved. The following ten years continued this streak:
This is what we call a parabolic move to the upside. The roaring 1990's. WOW. The markets appreciated over 300%. There were a few corrections, but if you were a long term investor, you were happily rewarded! Then this happened:
The 2000's, are very similar to the 1970s, but even WORSE. We didn't appreciate at all. Today, it's all about seeking risk-adjusted returns. As an investor, I would look beyond the next year. If you have a long term investing future greater than 10 years, you need to be long the equity markets. Here is a chart from 1970 to 2010:
Don't miss the next 1980's and 1990's!!!
I guess you still see selective shorts (like with GRPN today and TZA recently). Does seem like the market has reached a top but doesn't want to go down.
ReplyDeleteWould be great if the market could repeat the 90s, but the internet and computers changed the world and something similar would have to come along.
trying to keep my net long exposure under 100%. GRPN is going to be a longer term hold (Hopefully!).
ReplyDeleteI think the 1980s is defintely possible. I think the mobile/internet revolution is beginning again...The 2000s it was false profits. Today those companies are beginning to make real $$.
I love how GRPN bounced when the CEO got fired (it should trade back down to that level). He got fired from an impossible job. The company needs to fold.
ReplyDeleteActually know someone who works for Living Social here in DC. I think they just got a cash infusion. The business models of these companies are scarey. That being said, it's tough to advertise these days. Commercial free radio, Tivo on TVs, mail is a tough way to advertise also. So maybe companies will Groupon and Living Social to stay connected to people. I got tired of the ads so I quit Living Social. But it seems like the stock is saying there's some hope. You think it would be below $4 now.
ReplyDelete