Tue 30 Sep 2008
17 And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.
18 Here is wisdom. Let him that hath understanding count the number of the beast: for it is the number of a man; and his number is Six hundred threescore and six.
This has now been adjusted for inflation and the new number of the beast, that can only be sold, is:
| Dow |
10,365.45 |
-777 |
Tue 26 Aug 2008
On Seeking Alpha (http://seekingalpha.com/article/89693-the-only-chart-true-investors-need-to-see?source=feed) the following chart was posted:
The post was titled “The Only Chart True Investors Need to See.” This paints a nice picture;
The S&P 500 rising over twenty fold! Holy Crap!
The market always goes up! Up a lot!
… but look at the timeframe … 1871 through 2008.
As John Maynard Keynes said, “”Now ‘in the long run’ this is probably true… But this ‘long run’ is a misleading guide to current affairs. In the long run we are all dead.”
If you look at the chart, you can see extended periods where the market is flat, or even down. This century would be one of those periods. If you were 60 years old in 2000, banking on “historical, long term returns” to prepare you for retirement at 65, a buy and hold, passive, asset allocation, classic modern portfolio theory investment strategy (buzz words and industry jargon are intentional) would not have served you well at all.
So what’s the DIY investor to do? If you are not Calpers or the Yale endowment how do you handle a shorter timeframe? In Keynes’ words, how do we deal with this before “we are all dead?”
In my experience, we need to learn to deal with what can be called an “event horizon.” You can look here (http://en.wikipedia.org/wiki/Event_horizon ) for a definition, but for our purposes, we will look at how to stay away from the black holes of investment.
More in our next POV.
