Sunday, March 30, 2008

If I wasn't poor...

If I wasn't poor, I would say that right now would be a great time to buy stocks. Probably I would do so in the form of index funds, and put some percentage overseas just in case I am way off here. I didn't realize just how poorly the stock market had really done though:

"Conventional stock-market wisdom holds that if investors buy a broad range of stocks and hold them, they will do better than they would in other investments. But that rule hasn't held up for stocks bought in the late 1990s or 2000.

Over the past nine years, the S&P 500 is the worst-performing of nine different investment vehicles tracked by Morningstar, including commodities, real-estate investment trusts, gold and foreign stocks.

Big U.S. stocks were outrun even by Treasury bonds, which historically perform much less well than stocks.

Adjusted for inflation, Treasurys are up 4.7 percent a year over the past nine years, and up 5.8 percent a year since the March 2000 stock peak. An index of commodities has shown about twice the annual gains of bonds, as have real-estate investment trusts.

Stocks also underperformed other investments during the 1930s and the 1970s. During both of those periods, stocks would rally strongly, only to fade. It took well over a decade in each case for stocks to move lastingly upward."


I honestly didn't realize just how bad stocks had got over the past decade. This rather surprised me. The source sounds legit, it appears to come from the Wall Street Journal.

I cannot imagine a world where stocks stay a worse investment than gold. Maybe I am short sighted, but I read that and think: It has been a decade and stocks haven't risen much. The last two times that happened it lasted about a decade. Therefore stocks are due for some massive increases. Stocks really should be pretty cheap in comparison to other investments. Perhaps our huge trade deficit, and public debt mean an end to the stock market being a good place to put money. I am not counting on it though. Stocks have just done too well historically, they are almost certainly due for a run up. Chances are high that now is the equivalent of buying gold in 2000 when it was cheap as heck, and no one thought it was a good investment.

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