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Author Topic: Debating the Stock Market (like in investing- not photography)  (Read 4564 times)

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« on: January 17, 2008, 14:16 »
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"As time passes your investment dividends will keep multiplying.  By the time you reach your 40's or 50's, you will be financially set for life.

Like I said I don't know what your future plans are, but I've started to invest early.  It's amazing to see an initial $10,000 USD investment grow to over 60 million dollars over 70 years at places like Edward Jones and such."



This is very unlikely.  VERY unlikely.  The US stock market is approaching a peak in a long bull market that started way back in 1906.  All the impressive numbers put out by marketing people are based on a bull market that will NOT be sustained.  The cracks are already showing by the sub prime problems, which are only the tip of the iceberg.

In a long bull market spanning generations, people forget the true realties and live life with their heads buried in sand.

Haven't you noticed the Japanese market?  Peaked in 1990 at 39,000 and now, nearly twenty years later, it is still down at 14,000.  It is not likely to regain that 39,000 peak for at least another twenty years, perhaps longer.

Financial markets can have very long periods of zero or negative returns, and people have forgotten that.  There is a rude awakening coming, and has already started.

Historically, periods of fifty or sixty years of zero returns in stock markets are not uncommon.
« Last Edit: January 19, 2008, 05:18 by leaf »


« Reply #1 on: January 17, 2008, 14:34 »
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Historically, periods of fifty or sixty years of zero returns in stock markets are not uncommon.


Where are you getting that?  What data are you using?  Considering MODERN capital markets have only been around for at most 150 years, the quoted comment is baseless.  Perhaps in third world countries where annual growth is non-existent.  The established North American and European markets have been able to record somewhat consistent growth over long periods of time.  For example, when I was editing textbooks and doing the work, some basic research data easily shows that:  If you invested $1 in the TSX index in the 1950s you'd have more than $80 today even with massive losses some years (I'm sorry but I cannot remember the exact values)

Japan is a bad example to use due to other issues that have plagued the country.  Even still, the Japanese dont' seem to be doing so badly.

Bottom line is this: a balanced investment portfolio will be able to perform well into the future and provide a very good return

If anyone wants to give me 5 million dollars, I can demonstrate :)


« Reply #2 on: January 17, 2008, 14:51 »
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"As time passes your investment dividends will keep multiplying.  By the time you reach your 40's or 50's, you will be financially set for life.

Like I said I don't know what your future plans are, but I've started to invest early.  It's amazing to see an initial $10,000 USD investment grow to over 60 million dollars over 70 years at places like Edward Jones and such."



This is very unlikely.  VERY unlikely.  The US stock market is approaching a peak in a long bull market that started way back in 1906.  All the impressive numbers put out by marketing people are based on a bull market that will NOT be sustained.  The cracks are already showing by the sub prime problems, which are only the tip of the iceberg.

In a long bull market spanning generations, people forget the true realties and live life with their heads buried in sand.

Haven't you noticed the Japanese market?  Peaked in 1990 at 39,000 and now, nearly twenty years later, it is still down at 14,000.  It is not likely to regain that 39,000 peak for at least another twenty years, perhaps longer.

Financial markets can have very long periods of zero or negative returns, and people have forgotten that.  There is a rude awakening coming, and has already started.

Historically, periods of fifty or sixty years of zero returns in stock markets are not uncommon.


While what you say is true, it does not mean that just parking ones money is the only way to invest.

Nice money can be made in good and bad times. Is a sector/stock overinflated? Short that. Is a stock having wild swings? Buy low sell fast (and high). Is the overall market going down/in recession? Look for efficiency-oriented companies: they sky-rocket when everyone is out to save money.

I know people (won't give names ;)) that had a blast since things started going down this summer.

I am not giving any investing advise here. Just playing the devil's advocate :)

« Reply #3 on: January 17, 2008, 23:36 »
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Perhaps in third world countries where annual growth is non-existent. 

Actually, money is moving to those countries that have been showing above average growth... My own little Panama has had a growth over 10% and even Venezuela, with their madman as president, has shown big growth....


« Reply #4 on: January 18, 2008, 10:18 »
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Perhaps in third world countries where annual growth is non-existent. 

Actually, money is moving to those countries that have been showing above average growth... My own little Panama has had a growth over 10% and even Venezuela, with their madman as president, has shown big growth....



Its easy for Venezuela to have growth when oil prices are running amok all over the place.  I'm not going to get into an economics debate, but I don't think I would consider Panama third world

« Reply #5 on: January 18, 2008, 13:38 »
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This is very unlikely.  VERY unlikely.  The US stock market is approaching a peak in a long bull market that started way back in 1906. ... In a long bull market spanning generations, people forget the true realties and live life with their heads buried in sand.
ROTFL. The second statement is applicable to the first, and the whole post in general that matter. It also shows a lack of knowledge about the US stock market. "long bull market that started way back in 1906" is a complete fallacy. The crashes of October 29, 1929 and October 19, 1987 come to mind. But beyond that there have been 23 bear markets in the US market which average about  1 year.

Please, lets stick with actual facts rather than unsubstantiated statements that border on lunacy.

« Reply #6 on: January 18, 2008, 14:46 »
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This is very unlikely.  VERY unlikely.  The US stock market is approaching a peak in a long bull market that started way back in 1906. ... In a long bull market spanning generations, people forget the true realties and live life with their heads buried in sand.
ROTFL. The second statement is applicable to the first, and the whole post in general that matter. It also shows a lack of knowledge about the US stock market. "long bull market that started way back in 1906" is a complete fallacy. The crashes of October 29, 1929 and October 19, 1987 come to mind. But beyond that there have been 23 bear markets in the US market which average about  1 year.

Please, lets stick with actual facts rather than unsubstantiated statements that border on lunacy.


I agree.

« Reply #7 on: January 18, 2008, 16:20 »
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Thank you for your comments Yingyang.  Just because my view differs from yours doesn't mean that I am a lunatic.  A man with your knowledge and experience should know better than that and refrain from such comments.

For your information, before moving to start a new life here in Australia, I spent twenty years working as a Fund Manager responsible for managing large sums of money in global equity markets.  As part of my work I studied the history of financial trends going back hundreds of years.  I have appeared as a guest on CNN, Bloomberg Television and BBC many times and my views and observations have been published in the world's financial press more times than I can remember.

Please don't assume that just because you disagree with my comments I lack sufficient knowledge.

« Reply #8 on: January 18, 2008, 16:46 »
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"The US stock market is approaching a peak in a long bull market that started way back in 1906. ... In a long bull market spanning generations, people forget the true realties and live life with their heads buried in sand."

I respect your right to say what you please, but I believe this is a baseless and somewhat ridiculous claim.  There have been many recessions (ahem, the Great Depression? - you know, the 10 years of disparity that ravaged capital markets) and years of negative growth since 1906, which would then nullify the 'bull-market since 1906' claims. 

"Please don't assume that just because you disagree with my comments I lack sufficient knowledge." - You may have all the knowledge in the world, but I don't believe your comments were thought out well enough to show your apparent expertise in such fields.

« Reply #9 on: January 18, 2008, 16:47 »
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hatman, I am sure you know what you are talking about but I remember reading a book about Jesse Livermore, one of the great stock traders.  He went broke once anticipating the top of the market.  None of us can say for sure that the bull market is about to end.

« Reply #10 on: January 18, 2008, 18:13 »
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A very good book sharpshot, and worth reading several times.  Sadly I believe he ended up blowing out his brains in a public toilet, which just goes to show that owning a mansion with a 50ft yacht parked outside doesn't necessarily bring happiness.

Ichiro I can assure you that I never make any comments nowadays without thinking things through thoroughly.  And certainly not when it comes to financial markets.

It is a matter of degree and interpretation, as I'm sure you will agree.  YingYang would have us believe that most bear markets are short and sharp.  I suppose it depends on how you define a bear market.  Technicians will tell you that a bear market is a drop of 20% or more.  Others will quote the peak to trough prices.

A different view is 'how long does it take to recover one's losses' and if you study financial history on this basis you will get a different picture.

Imagine that a man has $500,000 in his pension fund in 1969/72 and is looking forward to a comfortable retirement.  By 1975 his fund has fallen to $250,000 ($150,000 if invested in the UK at the time) and his enjoyable retirement is destroyed.  YingYang tells him the bear market has 'ended', but for that man the bear market will only end when he recovers his loss, and that is something completely different.

50c does not buy a dollar.  Only a dollar buys a dollar.

If you examine history on the basis of how long bear markets took to regain previous losses you will see what I mean.  Is the Nasdaq in a bull market from the lows of 2003, or is it still down 60% from the top?  Is the glass still half empty?  It depends on your point of view.

Sharpshot I have not called a top to this market.  Indeed I believe we have a higher peak to come in the period 2010/12 (probably 2012).  But in the final distribution phase of a long bull market the majority of stocks start to fall well before the final peak in the indices.  Not all assets peak at the same time.  It is likely that Banks, Brokers and property have already peaked, but that doesn't mean the indices cannot make new highs.  It does mean that more people are losing money than making money.  What we are seeing now in financial markets is just a hint of bigger problems to come (this is my view, lunacy or not).

Has anyone seen the news that Jim Rogers has left America, sold all his assets and moved to Singapore?  Is he a lunatic?  Or simply one of the most astute money managers of modern times.......

« Reply #11 on: January 18, 2008, 18:19 »
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Thank you for your comments Yingyang.  Just because my view differs from yours doesn't mean that I am a lunatic.  A man with your knowledge and experience should know better than that and refrain from such comments.

For your information, before moving to start a new life here in Australia, I spent twenty years working as a Fund Manager responsible for managing large sums of money in global equity markets.  As part of my work I studied the history of financial trends going back hundreds of years.  I have appeared as a guest on CNN, Bloomberg Television and BBC many times and my views and observations have been published in the world's financial press more times than I can remember.

Please don't assume that just because you disagree with my comments I lack sufficient knowledge.
It wasn't a lack of knowledge, or a difference in views, that drew my comment it was the completely baseless statements, if not falsification of the facts. I'd all like to point out that calling statements crazy is different than calling a person crazy. Below I outline your claims and the facts and/or my opinions as applicable.

Hatman Claims:
1) "The US stock market is approaching a peak in a long bull market that started way back in 1906.  All the impressive numbers put out by marketing people are based on a bull market that will NOT be sustained."
2) "The cracks are already showing by the sub prime problems, which are only the tip of the iceberg."
3) "Haven't you noticed the Japanese market?  Peaked in 1990 at 39,000 and now, nearly twenty years later, it is still down at 14,000.  It is not likely to regain that 39,000 peak for at least another twenty years, perhaps longer."
4) "Financial markets can have very long periods of zero or negative returns, and people have forgotten that.  There is a rude awakening coming, and has already started."
5) "Historically, periods of fifty or sixty years of zero returns in stock markets are not uncommon."

My Responses to each claim:
1) It may be your opinion that the US market is approaching a peak, but it is a complete falsehood that there has been a bull market since 1906 and I would expect someone with 20 years experience not to make such false claims. As I said eariler, the truth is there have been 23 bear markets since 1906 (not including the current market downturn).

2) We disagree about the sub prime problems being the tip of the iceberg but this one is just a difference of opinion rather than a falsehood.

3) Yes the Japanese market peeked in 1990, and it took until 2003 to bottom. However it is disingenuous to compare the Japanese market to the US market, because you and I both know that the stagnation was caused by uniquely Japanese problems which were wholely unrelated to the current problem in the US banking system. The problems in the japanese banking system weren't fixed until 2002.

4) Yes there can be long periods of zero of negative returns, but long is relative (see the actual facts below).

5) Since the US Federal Reserve was created in 1913 (as anyone with any knowledge of economics knows, comparing to anything previous to the creation of the Fed is usless) the average bear market showed a decrease of 32.7% and lasted 1 year and 2 months.  The shortest bear market was the crash in 1987, which lasted less than two months. The longest bear market occurred between November 1938 and April 1942. 

The fact is you made a few outright false statements and may disingenuous one. To quote you "A man with your knowledge and experience should know better than that and refrain from such comments".
« Last Edit: January 18, 2008, 18:30 by yingyang0 »

« Reply #12 on: January 18, 2008, 18:34 »
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Has anyone seen the news that Jim Rogers has left America, sold all his assets and moved to Singapore?  Is he a lunatic?  Or simply one of the most astute money managers of modern times.......
Are you talking about Jim Roger co-founder of Quantum Fund? He was a professor of mine at Columbia.

Edit: He was right when he moved, China is the next great bull market. That doesn't mean The US market will tank. My personal investing style is different than Rogers (I'm a value investor) so I have yet to find a China stock I like, yet I am looking. The problem with china is when they actually decide to float their currency. China stock market is not well regulated and reminds me a lot of the 1920s.

Anyway can we get back to microstock?
« Last Edit: January 18, 2008, 18:48 by yingyang0 »

« Reply #13 on: January 18, 2008, 19:19 »
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China is the next great bull market.

...reminds me a lot of the 1920s.



Well, we agree on something.

Back to Microstock...

« Reply #14 on: January 18, 2008, 19:21 »
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Should probably create a separate thread. This debate is intriguing.

Remember one thing however, 1920s were followed by the 1930s.  Beware of China.  In short term money is there to be made.  The long-term stability of the nation, in my opinion, is very questionable at the moment - however - that is not to say that they cannot be fixed.

Back to microstock, I'm enjoying the new hike in prices at iStock.  Big-ups to management and I am seriously starting to consider an exclusiveness there once I go silver.  Hip hip houray!

« Reply #15 on: January 19, 2008, 08:02 »
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« Last Edit: January 19, 2008, 08:13 by sharply_done »


 

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