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Big Bear Ahead?
Old 03-04-2008, 08:31 AM   #1
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Big Bear Ahead?

What do ya'll think? is he saying that we are going to have a 20 year bear market like the 20 year bull we had in 82-2000?

If so what is a new investor to do?

The bull market won't come back - Mar. 3, 2008
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Old 03-04-2008, 08:41 AM   #2
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Something you might enjoy, if you have some spare time now and then, is going back and looking at what columnists said about the stock market 5, 10, or 15 years ago. It's hilarious! Even those in the most respected of venues really do not have a clue, for the most part.

So, I would take it with a grain of salt. He could be right, or he could be totally off base.

As to what a new investor is to do, I would say that the first step is to devise an asset allocation plan that you can live with and that allows you to sleep at night. Then within that plan, diversify by including investment categories with low correlation to one another.
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Old 03-04-2008, 08:45 AM   #3
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i agree

we've had cycles averaging approximately 20 years each going back to the 1800's. 20 year bull followed by 20 year bear. why change now? technology might change, but human psychology stays the same.
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Old 03-04-2008, 08:50 AM   #4
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So how do you come ahead in a bear market that last 20 years? I know diversify and invest for the long haul and all that stuff but if the market just continues to go down for the next 20 years and those 20 years happen to coencide with my 30's and 40's (earning years) how on earth can I have a postive growth?

Sorry I am new to this so go easy on me.
Thanks
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Old 03-04-2008, 09:02 AM   #5
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So how do you come ahead in a bear market that last 20 years? ... how on earth can I have a postive growth?
How do you know you'll live to see tomorrow? The answer is you don't know for sure, but based on history the odds are that you will. The same holds true for the growth of the market over the long term. Market pundits get paid to make predictions and I see this article as nothing more than another financial journalist with a deadline to meet.

That said, I do believe he was dead on with one of his predictions: "But of course no one knows what stocks will do - other than fluctuate."
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Old 03-04-2008, 09:03 AM   #6
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So how do you come ahead in a bear market that last 20 years? I know diversify and invest for the long haul and all that stuff but if the market just continues to go down for the next 20 years and those 20 years happen to coencide with my 30's and 40's (earning years) how on earth can I have a postive growth?
"diversity and invest for the long haul and all that stuff" is exactly how. Nothing is going to protect you from a worst case scenario. You just do the best that you can. Remember, the point is to buy low and sell high, so in such a scenario you would be doing most of your buying (in the latter part of your earning years) at lower prices.

I really, REALLY think you need to revisit your asset allocation. Also, read The Four Pillars of Investing by William Bernstein. After you have read it, re-read it at least twice.
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Old 03-04-2008, 09:07 AM   #7
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does this mean i better buy more lottery tickets? LOL

if we accept this guy's opinion as valid, and a bear of some length may happen, what better time for a new investor to get in there and buy low?
i'm not a market timer, nor do i believe in the concept. the market is the market is the market...
from personal experience, my first 5 years investing just happened to coincide with the tail end of the late 90s tech bubble, and on the advice of a CFP i hired for FP, the bulk of my aggressive DCA was during the follow-on bear market. pure coincidence. Focus on diversification was what they told me.
and now, i'm paying the fiddler for a short while. long term investing will smooth out these periods of bull/bear.
there are a lot smarter people than i am here. i am sure we will get some good replies on this thread.
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Old 03-04-2008, 09:08 AM   #8
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I wasn't jumping on the bandwagon with this columist. It just got me thinking...

Say I want to retire in 20 years when I am 47 and the market does nothing but move slowly southward over those 20 years. How could I ever get ahead? is there anyway?

Just a hypathetical (sp?)
Oh and Want2: I just got that book about a week ago. I will be reading it this month.
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Old 03-04-2008, 09:15 AM   #9
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So how do you come ahead in a bear market that last 20 years? I know diversify and invest for the long haul and all that stuff but if the market just continues to go down for the next 20 years and those 20 years happen to coencide with my 30's and 40's (earning years) how on earth can I have a postive growth?...
Bear markets are great if you are in accumulation phase, especially in the early stages... You should not be focused on growth (of $) as much, but in accumulation of equities. Once the prolonged bear is over, the bull will follow and your portfolio will grow accordingly (unless the whole global economy collapses, in which case you have a much bigger problem).

I am not saying his predictions will come true, but assume for the moment that he is correct... As I see it, 2 positive things come to mind: (1) there was never a case of 20 down years (prolonged bear means some years up, some down, but little "upward" action overall) and (2) we're almost 1/2 through the prolonged bear.

Edit: I should add, I would much rather spend my working years in bear market conditions, then to retire at the very beginning of a long bear market!

Bottom line, no one knows what the markets will do... just hang in there!
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Old 03-04-2008, 09:25 AM   #10
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So how do you come ahead in a bear market that last 20 years? I know diversify and invest for the long haul and all that stuff but if the market just continues to go down for the next 20 years and those 20 years happen to coencide with my 30's and 40's (earning years) how on earth can I have a postive growth?

Sorry I am new to this so go easy on me.
Thanks
preserve capital

and one thing to watch out for is that every secular bear market we have had has seen deflation/inflation mini bear markets. stocks lost big in each phase but the differences are which assets performed. in the deflation phase income producing assets perform well. in the inflation phase commodities and other hard assets perform well
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Old 03-04-2008, 09:27 AM   #11
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Thanks Lucija: that makes sense.

I suppose as my earnings increase with age and the bear market continues down I would be making bigger and bigger contributions at lower market levels. Like dollar cost averging but on a larger scale.

As opposed to having a large sum in the market already when the bear starts and watching it decrease at a greater rate because you have more to lose.
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Old 03-04-2008, 09:30 AM   #12
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I wasn't jumping on the bandwagon with this columist. It just got me thinking...

Say I want to retire in 20 years when I am 47 and the market does nothing but move slowly southward over those 20 years. How could I ever get ahead? is there anyway?

Just a hypathetical (sp?)
Oh and Want2: I just got that book about a week ago. I will be reading it this month.

i'm learning chart reading since the patterns stay the same. book i'm reading has examples from 1995-1998. learn the basic patterns and preserve capital when the market is topping.

if you google these things, people have been researching this stuff for decades and have noticed that stocks perform in cycles who's time frames never go far from the averages
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Old 03-04-2008, 09:51 AM   #13
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Hindsight being 20/20 - the last bear/flat 1966-1982 idiot that I am: I did real estate, timberland, gold, silver, mining, commodity, natural resource stocks, fixed income stuff, preferred, convertible etc.

Huge mistake.

Had I only kept the faith and dollar cost invested it all(100%) in 500Index in my 20's and 30's instead waiting till after 1987 in my 40's then:

the cheeseburger in paradise would be the real deal instead of Kansas City.

'God Looks After Drunkards, Fools and The United States of America.'

heh heh heh - of course you can read Kiyosaki today(Yahoo) if you like gloom and doom and eat some freeze dryed food from your seven year stash(if you have some left from the 1970's). .
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Old 03-04-2008, 09:52 AM   #14
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Oh and Want2: I just got that book about a week ago. I will be reading it this month.
Great! I will warn you that it is a little tedious in places, but I think it is a really helpful book in these matters. Once you read it, I think you will feel more comfortable with diversifying, asset allocation, and investing for the long haul.
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Old 03-04-2008, 10:07 AM   #15
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What do ya'll think? is he saying that we are going to have a 20 year bear market like the 20 year bull we had in 82-2000?

If so what is a new investor to do?

The bull market won't come back - Mar. 3, 2008
I heard this in 2000 when the tech crash began- we will be in a long term bear, with small cyclical bulls in between.

I have also heard that there will "bubble" investing for quite some time- from tech bubble to RE bubble to credit bubble to weak dollar bubble. What will be next?

If you believe long term bear, buy and hold is not the best idea. My suggestion if you think we are headed into bear terriritory would be to load on on equity income type funds which pay larger than normal dividends.
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Old 03-04-2008, 10:08 AM   #16
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"There is always a bull market somewhere."
The Japanese stock market had some tough times after its bubble.
But there were other markets that had a bull run.
The developing countries India, China etc might be in bull markets in the future.
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