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A Generational Opportunity
Old 03-17-2009, 02:14 PM   #1
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A Generational Opportunity

Good news for those with longer time horizons.

A combination of factors is responsible for the woes of the last 40 years, but one thing has been consistent. When we find ourselves at historic market lows, we are presented with rare opportunities. The world must have looked pretty bleak to investors at the end of 1941 -- in addition to all of the travails endured over the previous 40 years, the United States was entering yet another World War with no certainty of victory. Psychologically, it must have made our current circumstances look trivial in comparison.
Nevertheless, we see little current evidence that encourages us to invest in stocks. We are bombarded on a daily basis with terrifying news of the most recent collapse; a steadily declining stock market with prognosticators predicting more of the same, and if we try to educate ourselves by perusing recent business titles we see that the number one bestselling financial book on Amazon is "The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History." What's more, most of our recent experiences with stocks have been negative. The ten years ending February 2009 -- where the market lost 5.79 percent per year -- were the worst 10-year return for the S&P 500 since 1900, and the recent decline over the last six months was the swiftest for stocks since 1932.

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Old 03-17-2009, 02:18 PM   #2
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No question, IMO. One of two things happens from here: The U.S. government and many other world democracies collapse into chaos, or the market eventually recovers and powers higher.

If you're an accumulator in your 20s or 30s, the worst-case for you is the same as for all the rest of us (and you've accumulated less to lose!), and the best case is that you get to load up on depressed stock prices in the stage of your life when they will provide the best long-term growth.

Perhaps this is how people (at least those who had jobs) may have felt in 1932 and 1982. Yes, those were probably better "buying opportunities" than this one on an absolute valuation basis, but these levels (even after the rally of the last week) are still a pretty attractive long-term price to accumulate.

So you young'uns need to load up on cheap stocks and strike it rich -- I'll need you good and wealthy to support my Social Security!

"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 03-17-2009, 04:29 PM   #3
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I'm with you. We currently have more disposable income than we ever have, and are happily pouring most of it into broad index stock funds every month.
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Old 03-17-2009, 04:51 PM   #4
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I'm still in the game at age 50.
Engineers are allowed to be eccentric, yes?

Accordingly, I would like to introduce the "Holiday Method" of investing. Nothing else seems to be working.
Today, on St Patrick's Day as it worked out, I did my first stock MF buy since I FIREd in 2007. I'm hoping the luck o' the Irish will be with me. I am part Irish.
The followup DCA will commence on April 1st, which is my FIRE anniversary.
I was going to wait until June to restart my stock MF DCA, for a different reason than market behavior. But what the heck, huh? The sale won't last forever.
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
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Old 03-17-2009, 05:03 PM   #5
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Originally Posted by freebird5825 View Post
The followup DCA will commence on April 1st, which is my FIRE anniversary.
April 1st may have other possibilities.
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
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