Advice?

I know of no reputable advisor or web site that advocated or advocates five years as the minimum time horizon a person needed prior to investing in stocks. "Long term" has always struck me as meaning 10 years or more in this context.

You could have made an even simpler statement, "regardless of what historical P/Es were, or what they will be, stocks are cheap today".

Read my post where I explained that even if P/E stays where it is, you will make some handsome returns over time.

In fact, over a long enough period, you will make more money if P/Es stay low. That's because the stocks that you would buy when reinvesting dividends, and which the companies would buy back, would be cheaper.

To the typical day trader, correct.

Recently the market was bullish, and all sort of mad schemes were invented for making a buck on stocks. Naturally most worked; this is what a bull market does. So we call these schemes "investing strategies"? The concept has gotten a bad name. Time to restore some sanity.

Nikkey was overpriced beyond any rhyme or reason. Literally many times over US valuations, for much less attractive businesses. Not so with US stocks. Look for substance beyond the numbers.

Assigning probabilities, even vague ones like this, is where I start to differ. I would have qualified this statement with something like, doh, "If past performance guarantees future returns... "

Apparently you do. Stop reading the blogs, for pete's sake! This so-called poor economy has been created by the doom and gloomers, in my opinion. And let's stop ALL bailouts. The US Constitution should treat everyone equally. Do you need a bailout? Even if you don't, you should get one. This is all nonsense. I hope it stops soon (better yet, yesterday!). The political system cannot now, nor could it ever, "fix" the economy. It doesn't have that kind of power. If it did, do you think we would ever had had $4 gas? Do you think Detroit would have been making cars no one wanted? Do you think the shoe manufacturing business would have gone to South America? No. Washington can't do anything. Stop listening.

Elizabeth Richardson

Just an anecdotal observation: Market timers tend to celebrate short term gains while being in denial about long term losses.

If I had predicted the market would go up or down or whatever at precisely time X in the future, and then it did as I predicted, I would call this luck. But this is just myself, and YMMV.

You based your earlier statements on bond returns yada Grahamian take (and I like Graham). With dividends now being cut by other than banks, I do not care to generalize nor speculate as grandly as you but rather wish to present here raw facts.

I do not advocate making such guarantees. I do advocate holding a good job; living within one's means; and saving regularly as a path to true wealth.

The media is replete with articles that suggest an investment horizon of 5 or more years calls for investing in stocks...just google and you will find plenty. Here are some...

BTW, as I mentioned earlier, getting in exactly 10 years ago one would have negative returns.

Anoop

I can ignore the remarks about the political system needing to fix things, but why completely ignore the blogs?

The current problems haven't been caused by doomsday folks. It's been caused by dishonesty, excessive greed, and lax regulation. The blogs just point out what is going on and and where things may be headed. This allows one to get educated about these things so that one can protect oneself before things collapse. They may not all be right, but at least they offer a different opinion and a set of facts that may not be evident from what the regular media is sending our way.

Anoop

I don't read the blogs, but you say they are doom and gloom. In what way are they different from the mainstream media which is spewing doom and gloom? And while I might agree with you that greed and dishonesty play a large part in our current trouble, a Chicken Little The Sky is Falling media contributes to further deterioration. I suggest not reading the blogs because you believe the forecasts (and no one can foretell the future) and you have apparently stopped thinking for yourself. It sounds to me as if they are making you sick with worry. That should be reason enough.

Elizabeth Richardson

The difference between the blogs and mainstream media is timing. The housing blogs were calling the craziness of the housing boom in late 2003/early 2004 (that's why I didn't buy in early 2004). Bloggers also pointed out the "credit bubble" years earlier than mainstream media.

Actually, they are not making me sick with worry. They have helped me educate myself and they have helped me plan ahead. I am checking out my available options to make things as secure as I possibly can for any reasonable outcome. (And no, I'm not stocking up on guns, ammunition and canned foods...)

When someone else posts about their worry, I tell them I'm worried too and here's what I've done about it.

BTW, it seems like you and Warren Buffett are in disagreement...he endorsed the $700B bailout.

Anoop

Yes it was an investing strategy. A bad strategy perhaps, but still an investing strategy. Holding a job etc maybe a strategy for good clean living, but it's not an investing strategy.

Anoop, your thought process is very good and you should read those blogs, etc. If you avoided the stock market crash of 2008, you did good. If you did not avoid it, it would take you six years to recover, assuming 10% returns.

If you keep thinking about ways you can lose money, it is a very helpful thing. Saved my own butt a few times.

Not even one gun???

And no canned food?

Warren Buffett, though, thinks that stocks are very cheap these days. Which is true regardless of what he thinks.

Would you please ring a bell at the bottom? Thanks, Doug

I can't tell you how wrong you are about this. The mainstream media was talking about a housing bubble 4 years ago. They talked about the tech bubble two years before it crashed. But, of course, I'm talking about mainstream financial media. Maybe you're watching the broadcast networks talking heads, who are worthless about all news.

Bloggers are also worthless. They are full of their own ego and will tell you what you want to hear. Like many things on the internet, take what they have to say with a large grain of salt. They have not "educated" you at all. Look how you are in disagreement from most who post here. Do you think those here are "uneducated" folks?

I don't really care what Warren Buffet says about the bailout. I think he is

180 degrees wrong in his politics - this and most everything else. Of course, he can afford to just give money away to people who aren't working hard at earning it, so he can afford his spending type of politics. But he owns companies - do you think he employs that same sort of giveaway thinking when he runs his companies? Many people think government should be run more like a business, although apparently not Warren and Bill.

Elizabeth Richardson

some...

The part of this web site that mentions five or more years does not read the way you claim. I am not going to bother checking the others when you are being this loose.

Not sure if you took dividends into account. Either way, negative returns over ten years have happened. So?

I'm not noting that, don't pull a slippery slope fallacy on me. :-)

The point I'm trying to make though is that just because stocks have been higher in the past, doesn't mean they will be higher in the future. Same goes for P/E. If, however, you have some evidence *other than past performance* (i.e., something that isn't self-referential) that P/E will go up, what is it? Has something happened in the economy to make you think P/E will rise, or are you just assuming it (probably) will because it's lower than it has been in the past?

You're asking someone to look into the crystal ball. If we waited to do anything in life until we knew what was going to happen next, we'd all be just sitting around. In fact, civilization would cease to exist, maybe even the human race would disappear.

As with many things in life, while past performance is no *guarantee* of future results, we do use past performance on which to base most life decisions. I will continue to be invested in equities because I believe that they provide the best return on my money. I believe the P/E of the S&P will return to not only 15 but escalate to 30 or more (and return yet again). When this will happen I don't know, but it has happened many times and there is no evidence to make me believe it won't happen again. There is nothing to make me believe that fluctuations in the economy will cease to exist. What goes up must come down, and what goes down must go up. Those of you who don't see this must have a lot of life in front of you.

Elizabeth Richardson