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Future of stock market
Old 07-07-2005, 02:26 PM   #1
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Future of stock market

I am optimistic about the future of the Stock Market for the next decade. While many forecast doom and gloom I see a possible run up in the market which could be very similar to the late 1990’s. There are several factors pointing to this scenario which I see combining into a “Perfect Storm”.

1. Baby boomers must quickly begin to save for retirement.
The Baby boomers have been negligent in saving for retirement despite their high incomes. They have lived beyond their means and put off saving for their future. The median amount of savings earmarked for retirement is aprox. 50-60K, at some point in the not too distant future they will have to face facts and begin saving. The most likely vehicle will be to “max out “there 401K.* These monies will most likely be invested in growth funds hoping to make the most of the short time they have left.

2. 401 K’s effect on the Stock market
The run up in the Stock market between 1975 and 2000 can, in large part, be traced to the funds being funneled into Stocks via Mutual Funds in workers 401K accounts. Although most workers contributed relatively little to these accounts (3-4% on average) the constant inflow of funds helped the market produce impressive returns. Those returns generated attention by people who would not normally invest in stocks, and investment in the market increased until it reached a fevered pace in the late 1990’s. Then came the inevitable correction in 2002, since the bottoming of the market in 2002 the Market has shown steady progress from the low 9000’s to a present level of 10500.* Funds have still been flowing into the market thru 401K’s although, the market has had a much smaller piece of the pie with more funds going to bonds and money markets with relatively dismal returns.

3. Increased productivity due to technology* * *
In the go-go 90’s the promise of technology was almost intoxicating. It seamed as if new technologies were being developed daily and the future was going to be a wonderful place where machines did our work and we would all be free to enjoy our new found, easily gained wealth. Then came the reality check. By 2003 people were saying technology is dead. Somewhere in the middle ground is where the actual truth lies. Technology is far from dead and is steadily increasing corporate productivity and profits. The promise of technology to create new products and markets worldwide is alive and well.*
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Re: Future of stock market
Old 07-07-2005, 02:28 PM   #2
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Re: Future of stock market

Quote:
Originally Posted by jimhcom
I am optimistic about the future of the Stock Market for the next decade. While many forecast doom and gloom I see a possible run up in the market which could be very similar to the late 1990’s. There are several factors pointing to this scenario which I see combining into a “Perfect Storm”.
Go for it, JimHCom!! I think it is a sleeper!!

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Re: Future of stock market
Old 07-07-2005, 03:04 PM   #3
 
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Re: Future of stock market

Sounds good to me. But if someone told me yesterday that today would bring a major terrorist attack in London, I would have predicted that the market would have gone down today.
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Re: Future of stock market
Old 07-07-2005, 03:08 PM   #4
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Re: Future of stock market

I dollar cost average into the market and have done fine. I dont have any problem with the stock market over the next decade, I just expect lower returns than average.
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Re: Future of stock market
Old 07-07-2005, 03:14 PM   #5
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Re: Future of stock market

You are right on the money.
I think we will get going this fall and not look back til 2010.
Of course, plan on a few rest periods along the way and I think we will see an important low sometime over the next 60 days.
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Re: Future of stock market
Old 07-07-2005, 03:30 PM   #6
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Re: Future of stock market

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Originally Posted by TromboneAl
Sounds good to me.* But if someone told me yesterday that today would bring a major terrorist attack in London, I would have predicted that the market would have gone down today.
If the event had happend on US soil, the market would have gone down. The US markets are US centric.
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Re: Future of stock market
Old 07-07-2005, 05:45 PM   #7
 
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Re: Future of stock market

And if the market had gone down, say 1%, the news media would have said:

"Market slides amid fears of renewed terrorism. "
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Re: Future of stock market
Old 07-07-2005, 06:19 PM   #8
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Re: Future of stock market

Sounds like the Harry Dent School of Investing in here.
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This time it's REALLY different. No, really!!
Old 07-07-2005, 06:49 PM   #9
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This time it's REALLY different. No, really!!

Hey, I love these Point:Counterpoint debates!* Can I take devil's advocate?* "Jane, you ignorant slut!"...

Quote:
Originally Posted by jimhcom
1. Baby boomers must quickly begin to save for retirement.
Yes, or they'll be working for the rest of their longevity.* If they haven't figured that out by now, what will turn on the lightbulb over their heads?* Why should they suddenly abandon the status quo life of material excess for a monkish endurance of accelerated savings in hopes for a prosperous retirement?* After all, Business Week has claimed that they're "Old.* Smart.* Productive."* I'm counting on my fellow boomers to solve Social Security's funding problems with their enhanced lifetime's future contributions.

Quote:
Originally Posted by jimhcom
2. 401 K’s effect on the Stock market
If employment has steadily improved over the last few years, and if companies are starting to make profits and wages are starting to rise, then where's the equivalent rise in 401(k) contributions?* Is there a pent-up demand for stocks waiting to be unleashed at the current market valuations?* Or should we wait for Bill Gross' DOW 5000, when the demand undoubtedly will be at an absolute frenzy?* Maybe all that extra money is just going into interest-only mortgages & home equity lines of credit.

Quote:
Originally Posted by jimhcom
3. Increased productivity due to technology
Didn't productivity keep rising between 2000-2003?* Unfortunately no one was buying, or those productivity gains came at the expense of job cuts/outsourcing.* One can just as easily proclaim that increased productivity will eventually enable companies to sell everything for pennies without any employees.* If productivity is rising for everyone, where's the profit in that?

Before we break out in a chorus of "Happy Days Are Here Again", let me provide a couple quotes:

"There may be a recession in stock prices, but not anything in the nature of a crash. Dividend returns on stocks are moving higher.* This is not due to receding prices for stocks, and will not be hastened by any anticipated crash, the possibility of which I fail to see.* A few years ago people were as much afraid of common stocks as they were of a red-hot poker.* In the popular mind there was a tremendous risk in common stocks.* Why?* Mainly because the average investor could afford to invest in only one common stock.* Today he obtains wide and well managed diversification of stock holding by purchasing shares in good investment trusts.
-- America's celebrity economist
Irving Fisher
5 September 1929

"I see nothing, however, in the present situation that is either menacing or warrants pessimism. During the winter months there may be some slackness or unemployment, but hardly more that at this season each year.* I have every confidence that there will be a revival of activity in the spring and that during the coming year the country will make steady progress."
-- Secretary of the Treasury
Andrew Mellon
1 January 1930

BTW, as of today we're 97.5% equities (minus whatever Tweedy, Browne Global Value has in cash) and we're thinking of picking up another percent or two of individual stocks.* I don't really care where the market goes if we can continue to pick up investments at value prices.* So under those criteria we need the market to drop by at least 40%...
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Re: Future of stock market
Old 07-08-2005, 09:44 AM   #10
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Re: Future of stock market

Quote:
Originally Posted by Nords
"Jane, you ignorant slut!"...
And general francissimo franco is still valiantly continuing his fight to remain dead...
Quote:
Didn't productivity keep rising between 2000-2003? Unfortunately no one was buying, or those productivity gains came at the expense of job cuts/outsourcing.
Whoops, stepped into my area there...a lot of the purchasing occurred in the late 90's, but a lot of the implementation, rolling out, customer familiarization and adoption, and business to business integration took years. So it may not be a directly correlated function of buying today and seeing productivity tomorrow.
[
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Re: Future of stock market
Old 07-08-2005, 10:16 AM   #11
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Re: Future of stock market

Quote:
Originally Posted by Just not
So it may not be a directly correlated function of buying today and seeing productivity tomorrow.
I don't understand the alleged strength of the correlation between improving productivity and the stock market, either... if that's so darn intuitive, where's DOW 36,000?
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Re: Future of stock market
Old 07-08-2005, 10:22 AM   #12
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Re: Future of stock market

Someone figures if productivity improves, so will earnings while costs drop.

On the other hand, I havent seen a financial talking head that isnt a complete moron.

Dow 36,000 is hiding right behind Dow 5000...
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Re: Future of stock market
Old 07-08-2005, 10:44 AM   #13
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Re: Future of stock market

I dare say the short term in up (cyclical bull), but the long term (~8years) is down (secular bear) as boomers PULL from retire funds to retire ... and, yes, a recession.

But who the hell really knows (when)?
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Re: Future of stock market
Old 07-08-2005, 10:48 AM   #14
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Re: Future of stock market

Quote:
Originally Posted by tryan
I dare say the short term in up (cyclical bull), but the long term (~8years) is down (secular bear) as boomers PULL from retire funds to retire ... and, yes, a recession.
These are the same boomers who haven't saved anything for retirement, and don't want to anyway because they're older, smarter, & more productive?

Quote:
Originally Posted by tryan
But who the hell really knows (when)?
That's the most accurate prediction this board has seen in a long time...
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Re: Future of stock market
Old 07-08-2005, 10:55 AM   #15
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Re: Future of stock market

Investing is really simple. Figure out when the market is going up, and buy in. When the market is going to go down, sell out and sell short. Maybe even make some options or futures moves to leverage your money and make more of it. Simple.
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Re: Future of stock market
Old 07-08-2005, 11:46 AM   #16
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Re: Future of stock market

I know the future and I'm not telling.
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Re: Future of stock market
Old 07-08-2005, 01:36 PM   #17
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Re: Future of stock market

Quote:
Originally Posted by rmark
I know the future and I'm not telling.
I thought I was the only one with the real crystal ball.
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Re: Future of stock market
Old 07-08-2005, 01:40 PM   #18
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Re: Future of stock market

The market's definately going up . . .
then it's going down.

Or maybe the reverse.
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Re: Future of stock market
Old 07-08-2005, 02:06 PM   #19
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Re: Future of stock market

"BTW, as of today we're 97.5% equities" Always look what a man does, not what he says.
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Re: Future of stock market
Old 07-08-2005, 02:23 PM   #20
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Re: Future of stock market

No idea what the markets are doing short or long term. Cheers!
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