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Remember the lessons of 9/11 when talking about this stock market.
Old 10-12-2008, 01:18 PM   #1
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Remember the lessons of 9/11 when talking about this stock market.

All this talk about stock market depressions, deflation, and austerity got me thinking.

Remember all the talk after 9/11 and how that date was a life changer for the many in the USA (I'm talking general population here).

Here are a couple of examples.

Many Americans Still Feeling Effects of September 11th; Are Reexamining Their Priorities in Life
"The survey also finds that Americans are reexamining their lives in light of the events on September 11th.
  • More than three-quarters of Americans (77 percent) agree that they have tried to simplify their lives and focus more on what really matters.
  • Seventy-one percent of Americans report having spent more time trying to gain perspective on their lives."
Study on Effects of 9/11 Attacks Show Most Americans Feel More Vulnerable
"and experienced a change in how they want to live their lives with a focus on living life to the fullest."

There may have been some that changed but I haven't seen an identifiable mass movement as a result of the 9/11 attacks.

If you wanted to be cynical you would say that Americans decided after their period of reflection that they would shop and buy a big house to put the stuff in.

+++++
So what lessons does 9/11 tell us about this stock market.
Now people are fearful, looking for answers and being reflective.
When the fear ends they will go back to buying - stocks/bonds and the next bubble item.
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Old 10-12-2008, 08:39 PM   #2
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In "The Four Pillars", Bernstein goes into some detail to show that "Bubbles" happen about every generation--when the previous victims die out. We seem to have been able to shorten this cycle to 8-10 years. Maybe we should pay more attention to P.T. Barnum?
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Old 10-13-2008, 02:31 AM   #3
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Originally Posted by mike hall View Post
In "The Four Pillars", Bernstein goes into some detail to show that "Bubbles" happen about every generation--when the previous victims die out. We seem to have been able to shorten this cycle to 8-10 years. Maybe we should pay more attention to P.T. Barnum?
I believe that the loss of pensions, and the doubts about social security in the minds of many people have pushed them toward becoming speculators. They think that they have no other way to prepare for retirement.

Ha
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Old 10-13-2008, 09:07 AM   #4
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I believe that the loss of pensions, and the doubts about social security in the minds of many people have pushed them toward becoming speculators. They think that they have no other way to prepare for retirement.

Ha
The same folks who are buying lottery tickets every week.
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Old 10-13-2008, 10:46 AM   #5
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Maybe we should pay more attention to P.T. Barnum?
If you're saying what I think you're saying, then you should know he didn't say what you think he said.

There's a sucker born every minute - Wikipedia, the free encyclopedia

Whew, I managed to get both an obtuse sentence and a useless fact out in the same post. My work here is done.
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Old 10-13-2008, 11:20 AM   #6
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Yeah, I looked it up after I posted thanks, but you got my meaning. According to Wikipedia someone said it. LOL!
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Old 10-13-2008, 11:31 AM   #7
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I believe that the loss of pensions, and the doubts about social security in the minds of many people have pushed them toward becoming speculators. They think that they have no other way to prepare for retirement.

Ha
When I started investing, 1972, was a time like now, people were saying, "mutual funds are a good way to lose your shirt." I put small amounts in when I could, money I didn't miss. I'm not a rich person, but that kind of "speculation" can work very well over the long run. The key is to not bet the rent/food/gas/etc. money. I did think of those small investment amounts as speculative money I could lose. Still am playing with that kind of money.
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Old 10-13-2008, 02:43 PM   #8
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I believe that the loss of pensions, and the doubts about social security in the minds of many people have pushed them toward becoming speculators. They think that they have no other way to prepare for retirement.

Ha

I think you are right. I have seen it with my in-laws. When, in their mid-50's they realized they didn't have nearly enough set aside for retirement, they started swinging for the fences as a desperate way to catch up. FIL started playing with options and futures and lost big money. When that didn't work, he invested a large chunk of money in his company stock. At the time he kept talking about how that stock would make them millionaires one day. That didn't pay off either. So in 2004 he put all their money in international equities. Finally they started making money (almost doubling their nest egg in 3.5 years) but, at age 60, my in-laws had a portfolio that was 95% invested in foreign stocks. When they divorced last year (the last blow to their retirement dreams), I convinced my MIL that a retirement portfolio that aggressive was pure folly for an unemployed divorcee in her mid 60's. I told her she should lock in her gains and diversify her portfolio. After much hesitation (because she had made so much money with international equities she wanted the party to go on forever), she agreed to switch to one of Vanguard's more conservative TR funds in the summer of 2007. She has been calling me everyday for the past month thanking me profusely. She thinks that, had she not made the switch, she would have lost more than 50% of her retirement savings by now, panicked and sold everything potentially at the worse time. In the end, she stills going to have inadequate savings for the retirement she envisioned, but at least she probably won't have to survive on SS alone.
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Old 10-13-2008, 04:39 PM   #9
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Originally Posted by mike hall View Post
In "The Four Pillars", Bernstein goes into some detail to show that "Bubbles" happen about every generation--when the previous victims die out. We seem to have been able to shorten this cycle to 8-10 years. Maybe we should pay more attention to P.T. Barnum?
Have we had more than one bubble or just one bubble which morphed it's true form 3-4-5 times?

tech then real estate then credit is really people just trying to get rich quick with 10% annual returns which are always positive.

I think the issue is that people do not like seeing negative years for the market and what that does to various financial or life plans. People want a way for instant retirement plan gratification (money doubled in 1 year for example) and want to parlay this into 3-4 doubles for a "retirement plan".

The next bubble is here, we may not know it's form, but guessing its muni bonds or TIPs. People now a days can move money so fast that it will be tough to tell until it already happens.
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