Is it time to re-enter the stock market?

Yes, as in theory/practice this is an indirect form of currency speculation unless your 25% is carefully divided up between different major world currencies.

Personally, I'd love it if the J.M.Keynes's idea of the Bancor had taken off, because then everyone could hold Bancors and know for certain that they weren't making any assumptions with currency trends in the future (+ importantly, we wouldn't have to pay fees to make transactions) A reserve currency sort of fills this role, but not as effectively as it should. once a upon a time not too long ago, the worlds reserve currency was UK Sterling. Now it is US dollar, but who can say how long that will last? Better to index all currencies and represent them by 1 unit, the single bancor reserve currency, that way there is no discrimination between currencies.

Reply to
Morgan
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The Nikkei peaked at around 38K in Dec 1989.

20 years later it's at 10K. Even if you got in after the crash at around 20K, you'd be severely underwater.

I know that we're much much smarter in this part of the world, so that won't happen here. :-)

Anoop

Reply to
anoop

It already happened here.

Last March, the S&P 500, adjusted for inflation, was at the same value as S&P 500 in 1965, if my memory serves me right. I hope that I am not wrong in this recollection, it was mentioned in a Larry Summers speech from that time.

Which means that there was no real stock appreciation for 44 years. Note, however, that stocks paid their owners dividends throughout this time.

There is a view out there, that suggests that stock prices is a mysterious number, behaving according to artificial rules of statistics, that has a magically proven property of always outperforming bonds over the long run.

This concept translates into a suggestion to "buy at any price", without relation to the underlying value (amount of dividends that the purchased stocks would yield).

That would not be a suggestion that I personally agree with.

i
Reply to
Igor Chudov

Ah come on, that was pretty much a quote out of context. If you read the next line after that statement of mine you see:

"(albeit I'd recommend global diversification in whatever you do, I make no bets on the future of any one economy, not even the China economy)"

Even though I'm 'sure' the Chinese economy is going to do well in the future, I make no assumptions, and I invest in many different economies.

I wouldn't make any assumptions about the American economy either, maybe you'll be underwater for twenty years too.

I think that's highly unlikely (some economies appear to be more robust than others, perhaps because of a diversity of industry instead of being dependent on a select group of sectors) but nevertheless it wouldn't affect me greatly if the American economy evaporated (in the long term that is, naturally in the short term it'd be hell and high water)

In any case, I purpose that the Japanese economy is a good investment, and that it is (horribly for a developed country) undervalued at the moment. It is useless taking the Japanese economy by itself, look at who it's sitting next to! Undeniably they have problems but nothing undervalued is perfect or everyone would be holding the stocks.

beautiful economic relationship in the future.

The Japanese have an enormous scientific-industrial complex for research and technology investment, and the Chinese have an enormous manufacturing capability. They make perfect allies.

If only they would hurry up and sign free trade agreements like the Trans-Pacific Partnership and put aside the historical angst. To be fair, WWII was 70 or so years ago.

Reply to
Morgan

If you're inferring that to myself, then I never suggested "buy at any price"! It is simply that after a very large market correction is a great time to begin investing, that's all I'm saying.

Reply to
Morgan

I did not mean to say that I disagree with you. I am sorry if my message came across as such.

i
Reply to
Igor Chudov

Equity-indexed annuity? (which account for some 30% of the "fixed" annuities sold in recent years.)

Okay, that's not a fair hit -- apples to oranges, annual resets, guaranteed minimum interest credited, etc.

Nevertheless, it's amazing how few folks realize that their index-linked annuities ignore such a huge portion of the actual return of the indices to which they are linked.

I know, it's a complete aside from an interesting conversation. Carry on.

Reply to
BreadWithSpam

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