No where does the author address asset allocations, your main argument for claiming “BS”.The article uses a hypothetical 40 year old Japanese person who bought the Japanese market in 1980 once and did nothing else. Such a person simply does not exist, so the article is total BS.
In this respect, this article is kind of like all those "Lost Decade" in the US articles (2000-2009). Nobody in the US bought 100% equities once in March 2000 and simple held to 2009. Nobody.
Buy-and-hold means buy equities (US & foreign) and bonds, rebalance, & tax-loss harvest, while sticking to your planned asset allocation.
cherry-picking slices of market history that support passive investing are the only ways Wall Street can justify exposing investors’ assets to a passive philosophy.
... it is worth noting that why the returns over the last 20 years in the Japanese market have been truly awful, the alternate investments for Japaneses have also being horrible. Japanese real estate is still below the peak levels, and interest rates on CDs, government or corporate bonds have been near 0% for most of the last 20 years.
? Where is the data supporting the position that active equity investors in Japan have fared better than their buy-and-hold brethren?
Ironically, in absence of a reliable alternative to passive investing, the only sensible conclusion one could draw from this report is not one the author likely intended . . . "don't buy equities at all".
In world were equity returns maybe negative the only way an adviser can make a living is advocating active investing...Risk management is not something you do for a while and then stop. I believe the evidence is clear that an active investment process is an absolute necessity to survive in today’s uncertain world
Actually given the equally bad alternative investments in bonds, or real estate.the most sensible conclusion is if you are Japanese is to move or at the very least invest outside of Japan.
Maybe not. Pre-crisis interest rates were in the 5% area. 10-yr and 30yr bonds would have done nicely. Current 10-yr rates are 1.2%, but inflation has been non-existent in Japan, so that is pretty close to a real yield (right on top of our 1.19% 10-yr TIPS rate). Not great, but I suspect a retiree who had 100% laddered treasury portfolio wouldn't have been in too bad of shape.
Of course I hedge by holding quite a bit of foreign stocks.
The chart in the linked article shows that the Nikkei is near its lowest point in the last 25 years. This means that an investor in the accumulation phase during that time has not made money, if she only buys and holds during that time. If she started out in her 20s in 1984, she is now in her late 40s, and has no returns to show for it.
Of course, if she has been [-]trading[/-] rebalancing during that period, she may still come out ahead.
So, could that be the thinking of some US posters who hold no equities?
The stock market can stay irrational longer than you can stay solvent is one of my favorite investment sayings...
Agreed . If I thought I already had a sufficient and guaranteed income stream in retirement, you can bet I wouldn't nearly be as aggressive in [-]gambling[/-] investing directly in equities.You can imagine that if social security was guaranteed to pay you 80% of the average of your last 3 years of income that you would probably not have to save any money for retirement. I'm not saying this is what happens in Japan and Europe, but just hinting at the possibility. Because of their governments benevolence, I think there are not as many investors in Japan and Europe as there are in the US.
The article uses a hypothetical 40 year old Japanese person who bought the Japanese market in 1980 once and did nothing else. Such a person simply does not exist, so the article is total BS.
And a St. Christopher medal, I hope?
Ha
Equally favorite of mine is that "trees can't grow to the moon"...
Agreed . If I thought I already had a sufficient and guaranteed income stream in retirement, you can bet I wouldn't nearly be as aggressive in [-]gambling[/-] investing directly in equities.
How about we don't focus on a cherry picked time period to create false doom and gloom and thus terrify the reader and hope they will see the light and become a client.Analysis of market history must be objective, and must not focus on markets or time periods that create unrealistic expectations, and thus false hopes.
Especially given this:Be skeptical of the market historian whose goal is to sell a product or a service. Ask yourself if they have a conflict of interest. In fact, every market historian should be read with a healthy dose of skepticism.
DDRoger Schreiner is the founder and CEO of Schreiner Capital Management, Inc. (SCM), an SEC-registered investment advisor located in Exton, Pennsylvania;
How about we don't focus on a cherry picked time period to create false doom and gloom and thus terrify the reader and hope they will see the light and become a client.
I do not see how the author is cherry picking at all in the case of Japan. As I already stated anyone purchasing and holding equities at any point between 1989 and approximately 2004 has lost money. That is a 15 year period! The charge of cherry picking misses the forest for the trees.
He chose the peak to now. How is that "not" cherry picking. How has it done from 1943 until now? As already pointed out he creates a straw man investor who only buys the Nikkei and then does nothing until now. There is nothing new here. Stocks lose money. Sometimes over long periods of time. That is why they are risky. If they didn't there would be NO potential for reward. This is the same old marketing by an active manager trying to enlist new clients. Caveat emptor .
DD
The real issue of the article is: what are the chances that the US equity markets will face a similar fate?