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https://marketwatch.com/story/stock-market-legend-who-called-3-stock-market-bubbles-says-this-one-is-the-real-mccoy-this-is-crazy-stuff-2020-06-17‘My confidence is rising quite rapidly that this is, in fact, becoming the fourth, real McCoy, bubble of my investment career. The great bubbles can go on a long time and inflict a lot of pain but at least I think we know now that we’re in one. And the chutzpah involved in having a bubble at a time of massive economic and financial uncertainty is substantial.’
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He predicted at the end of 2010 that US stocks will lag EM but he also was way, way off about several categories performance.
Example: he said that US will make 2.5% inflation + 0.4% = 2.9% yearly average in the next 7 years. The SP500 made 14.45% in the next 7 years (link)
All these "experts" are wrong because of Fed intervention.
Bottom line: add another false prediction.
So, I went looking. While I have concluded I'm just going to have to re-read "Adam Smith," I did find a wealth of quotes that might come in handy for investors of a certain frame of mind:
Besides re-reading "Adam Smith," I think I need to pick up a copy of Where are the Customer's Yachts?, by Fred Schwed Jr. "Smith" was certainly all about preserving principal.
Where to hide?
- It’s hard to call cash “inflated” at today’s rates.
- Oil was twice as expensive 10 years ago as today.
- Japan’s Nikki 225 stock index isn’t yet back to 1980s levels.
- Silver was more expensive in 1980 than now.
- Many Latin American countries are mired in debt, unstable governance, corruption and rampant Covid 19. These are scary scenarios. On the other hand these are the kinds of conditions that can prick bubbles and reward long term patient investors.
Longer term: U.S. equities may well have attained “bubble” status. But those who’ve invested in them over the past 30 years (and longer) have been laughing all the way to the bank.
Perspective: I graduated from HS in ‘65 with little knowledge of investing (aside from saving cash acquired caddying). A friend in college (around ‘67-‘68) introduced me to her dad who was selling mutual funds as a second job. That was the first I ever heard of them. He talked them up optimistically. We’d just been through a serious market correction and most average people feared stock investing. Since that time, markets have experienced multiple bull and bear markets. The term “bubble” gets tossed around loosely. If there were bubbles along the way, after they burst the U.S. market went on to even higher levels.
Link: Linked article discusses the highs and lows in the U.S. market since my own initial 1967-68 reference period. https://www.fool.com/investing/general/2013/02/25/bear-markets-in-modern-times.aspx Others here who date back to the ‘30s, ‘40s and ‘50s may want to share their even earlier recollections.
One of these years he'll be right again....