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OK, this must be the signal that "the top is near"
Article - ”Stocks Could Climb Through 2026, According to Our Latest Survey of Money Managers”
... Watch Bloomberg and you might conclude, depending on the particular day. it’s either raining cats & dogs or the sun is out and will continue to shine forever. Little real analysis.
Even with "real analysis", you would get multiple conflicting views. And the usual share of manipulation and planted stories.
Yep - So many “talking their book” it’s hard to know. I may stop the BB subscription when it runs out in 6 months. ISTM the on-air programming is about 40% commercials anyway. I would like to really know what the odds of another 1929 being near are. 10%? / 50%?
And how the hell would this nation even survive such were it to come?
I think that the lesson of Covid is that the government would perform bailouts and stimulus checks and other forms of stimulus policies. Debt would skyrocket and so would inflation. I suspect that would be what eventually brought our economy to its knees. a lame duck consumer and a debt burden, that cast a pall for a very long time.
I doubt it would play out the same as 1929, given all the changes to social safety net since then. But, the GFC was pretty darn bad. How many years before markets got back to previous highs? 4-6 years, maybe. That is a long time for anyone who retired around that time. Particularly, if they were force retired through layoffs.
”But, the GFC was pretty darn bad. How many years before markets got back to previous highs? 4-6 years, maybe.”
I was young and foolish in ‘07-‘09 / Threw money at it. First gradually and later all at once. By early ‘09 I’d moved 80 or 90% to international stocks which got hit hardest.
From my records:
2008 - 21.9% (neg)
2009 + 28.86% (pos)
2010 +9.39% (pos)
Not everyone was in a position to do as I did. If you sold near bottom you were screwed. And the GFC was much shorter than the Great Depression. I’m not inclined to compare the two.
”The S&P 500 took approximately six years to recover to its previous high following the Global Financial Crisis. The index bottomed in March 2009 and did not surpass its prior peak until March 2013, a period of about 65 months. This recovery timeline is consistent with other sources indicating it took around six years for the S&P 500 to regain its previous all-time high after the 2007–2008 crash.“
S&P closed 1379 on Jan 1 2008. It was mid-2012 before it hit that number again. More than 4 years. Correct me, if I have the numbers wrong.
Continued investments help a lot. I did same. No selling at all, I increased my buying. But, we shouldn't ignore that was a lot of lost time for many portfolios. I agree that the Great Depression is not equivalent to the GFC. In fact, that is my point. We could have something in the middle and it could still be very bad. I think that a solid portfolio hit to retirees could put a huge crimp in consumer spending. A lot of hunkering down.
Imagine a 5-10 year period where retiree portfolios initially drop 25% and then remain stagnant. That could certainly take the air out of consumer sentiment. I am prepared for such an event, but doubtful that many are.
@hank in what way are you prepared for such an event? "Inquiring minds want to know."
I’m flattered you should ask @Crash. Who can prepare? One doesn’t know what path the next financial disaster will take. Runaway inflation or deep recession? At near 80 I’m only 30% equity, 10% “other” (ie commodities, etc.) and about 60% in rate hedged AA+ bonds or very short-term paper of mixed quality. The 30% equity is after subtracting a 2% short position on the S&P (SPDN) and 2% short the DJI (DOG). So trying to hedge without throwing in the towel completely and going to all cash.
I’ve tried a bit to trod some lesser known paths than the crowd. ARB / MRGR / HDG
The problem with advanced age is you don’t have the time to go “all in” as things deteriorate and wait for the next up-tick as some of us did in ‘08. My knowledge of the GD market crash is that there was a “fake” rally early on that led some to see “light at the end of the tunnel”. Unfortunately, it proved to be a speeding locomotive.
Thanks, @hank. Ya, everyone's situation is different, of course. I appreciate the details you offered. I'm still barely over half in equities. S-l-o-w-l-y growing my foreign stake. Lotsa faith in Giroux. PRWCX and PRCFX are 54.33% of my portfolio. Wait, that can't be right. I'm looking at Morningstar. Figures.
... The problem with advanced age is you don’t have the time to go “all in” as things deteriorate and wait for the next up-tick as some of us did in ‘08. My knowledge of the GD market crash is that there was a “fake” rally early on that led some to see “light at the end of the tunnel”. Unfortunately, it proved to be a speeding locomotive.
That’s all folks. Others? Preparing?
Old joke: "Why are New Yorkers always depressed?"
Because the "light at the end of the tunnel" is New Jersey.
Fat tail risk exists, but I'm not certain it is prudent for many investors to structure their portfolios for an absolute worst-case scenario. These investors would presumably be leaving lots of money on the table. A better approach may be constructing a broadly diversified portfolio after thoughtful consideration of risk capacity and risk tolerance. Results will vary depending on an investor's personal circumstances. My portfolio is approximately 60% equity — U.S. and foreign; large, mid and small — and 40% fixed income — short-term Treasuries, multisector, nontraditional and "cash." I'm sure that I haven't constructed the perfect portfolio but it feels about right to me.
Comments
Yep - So many “talking their book” it’s hard to know. I may stop the BB subscription when it runs out in 6 months. ISTM the on-air programming is about 40% commercials anyway. I would like to really know what the odds of another 1929 being near are. 10%? / 50%?
And how the hell would this nation even survive such were it to come?
I doubt it would play out the same as 1929, given all the changes to social safety net since then. But, the GFC was pretty darn bad. How many years before markets got back to previous highs? 4-6 years, maybe. That is a long time for anyone who retired around that time. Particularly, if they were force retired through layoffs.
I was young and foolish in ‘07-‘09 / Threw money at it. First gradually and later all at once. By early ‘09 I’d moved 80 or 90% to international stocks which got hit hardest.
From my records:
2008 - 21.9% (neg)
2009 + 28.86% (pos)
2010 +9.39% (pos)
Not everyone was in a position to do as I did. If you sold near bottom you were screwed. And the GFC was much shorter than the Great Depression. I’m not inclined to compare the two.
To answer @DrVenture’s question. My AI chat says,
”The S&P 500 took approximately six years to recover to its previous high following the Global Financial Crisis. The index bottomed in March 2009 and did not surpass its prior peak until March 2013, a period of about 65 months. This recovery timeline is consistent with other sources indicating it took around six years for the S&P 500 to regain its previous all-time high after the 2007–2008 crash.“
Article for thought - What Is the Difference Between a Recession and a Depression?
Continued investments help a lot. I did same. No selling at all, I increased my buying. But, we shouldn't ignore that was a lot of lost time for many portfolios. I agree that the Great Depression is not equivalent to the GFC. In fact, that is my point. We could have something in the middle and it could still be very bad. I think that a solid portfolio hit to retirees could put a huge crimp in consumer spending. A lot of hunkering down.
Imagine a 5-10 year period where retiree portfolios initially drop 25% and then remain stagnant. That could certainly take the air out of consumer sentiment. I am prepared for such an event, but doubtful that many are.
I’ve tried a bit to trod some lesser known paths than the crowd. ARB / MRGR / HDG
The problem with advanced age is you don’t have the time to go “all in” as things deteriorate and wait for the next up-tick as some of us did in ‘08. My knowledge of the GD market crash is that there was a “fake” rally early on that led some to see “light at the end of the tunnel”. Unfortunately, it proved to be a speeding locomotive.
That’s all folks. Others? Preparing?
Ya, everyone's situation is different, of course. I appreciate the details you offered. I'm still barely over half in equities. S-l-o-w-l-y growing my foreign stake. Lotsa faith in Giroux. PRWCX and PRCFX are 54.33% of my portfolio. Wait, that can't be right. I'm looking at Morningstar. Figures.
Because the "light at the end of the tunnel" is New Jersey.
to structure their portfolios for an absolute worst-case scenario.
These investors would presumably be leaving lots of money on the table.
A better approach may be constructing a broadly diversified portfolio
after thoughtful consideration of risk capacity and risk tolerance.
Results will vary depending on an investor's personal circumstances.
My portfolio is approximately 60% equity — U.S. and foreign; large, mid and small —
and 40% fixed income — short-term Treasuries, multisector, nontraditional and "cash."
I'm sure that I haven't constructed the perfect portfolio but it feels about right to me.
Which exit?