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Bernstein comments on "troubled times"...
Old 04-23-2008, 02:22 PM   #1
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Bernstein comments on "troubled times"...

This sounds very familiar:

"Get out of the market? Of course not, silly. If you think about it logically, you are rewarded for owning stocks precisely because they are risky; the dicier things look, the more money you can expect to make in the long run.

History bears this out: The lowest returns were earned by buying high when there was a lot of blue sky - think 1928, 1969, 1999. And the best returns were earned by buying low in 1932, 1942 and 1982, when it looked like the whole world was going to hell.

One more thing: Stop watching CNBC. It will make you stupid and poor. If you must watch, turn off the sound. It becomes an excellent substitute for Animal Planet."

Calming words for troubled times - William Bernstein
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Old 04-23-2008, 02:28 PM   #2
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Originally Posted by REWahoo View Post

One more thing: Stop watching CNBC. It will make you stupid and poor. If you must watch, turn off the sound. It becomes an excellent substitute for Animal Planet."
How true. I rarely turn it on anymore. Much happier too.
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Old 04-23-2008, 02:30 PM   #3
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Isn't it just a wee bit ironic this quote came from Money Magazine?
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Old 04-23-2008, 02:40 PM   #4
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How about Burton Malkiel's "Calming Words for Troubled Times" in the same article at Calming words for troubled times - Burton Malkiel (6) - CNNMoney.com:

Quote:
We're in a very slow, lousy economy. It doesn't feel good. We won't have a V-shaped recovery. Companies won't get credit they need. People with slightly imperfect credit won't be able to buy a house.
One scenario has it that there will be a big bounce in the second half of the year because of the tax rebate. I am skeptical. 2008 will not be a super year.
Now I'm all cheered up. Thank you SO much, Professor Malkiel. (sigh)
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Old 04-23-2008, 04:08 PM   #5
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To complete the picture, stocks, if we are lucky, are still priced for a long-term real return of about 3.5 percent. (The dividend yield of the S&P 500 is currently 2.37%, to which another optimistic percent of real per-share growth can be added.)

Conclusion: The debt markets are so out of whack that we are now at a point where credit risk is being rewarded more than equity risk, something that should never happen in a world where equity investors own only the residual rights to earnings. This cannot last for very long: either spreads will tighten rapidly, equity prices will fall rapidly, or both. (Or, chortle, earnings will grow more rapidly.) Stay tuned.
William Bernstein; March 2008
Darkside of the Moon

Not such a bad forecast if you are significantly wealthy and your investment consultancy won't touch portfolios under -what is it?- $25 million?!?!?!?!?

Chortle.
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