yakers
Thinks s/he gets paid by the post
I posted this over at the Bogleheads board but thought the folks here might have more pertinent commentary being RE oriented.
Interesting article in The Economist magazine, Feb 27th, Buttonwood column, entitled The Very Long View. In the article are some facts like the British equity prices reached peaks in 1906, 1936, 1968 and 1999 and the US in 1928, 1968 and 1999. And in 1974 British equities traded for just 30% of their real value at the end of the 19th century. There are other observations on Japan (Share prices in Tokyo are still trading at only a quarter of their 1989 peak) and on US real estate prices (in real terms, an index of American house prices rose from 100 in 1890 to 110 by the end of the 20th century. By the end of 2006, at the top of the housing boom, the index had reached 199). And, according to The Economist, the driver of the current decline is demographics.
OK, so this is more sophisticated doom & gloom than some financial crackpots. But the question I always asked myself was what would a somewhat clever working stiff in Japan in the 1960s through the 1980s do to optimize their investments? I suppose I could add British investors since the 1900s. All as a guide to what should I be doing now. Seems like a lower percent in equities is warranted and probably a good percentage (50%+?) in international stocks.
The figures in the article did seem to support that equities could be good in the long term but the long term is 30 year cycles and I, being 60, don't really have a 30 year investment horizon and demographics are not in favor of the boomers. But right now, cash & fixed income offer some pretty bleak returns. I manage my elderly mother in law's assets and I keep those very short. I also manage a fraternal organization assets which has 100 year+ horizon, so they can go very long but I figure on wanting to maximize my spending over the next 10 to 15 years, what to do?
Interesting article in The Economist magazine, Feb 27th, Buttonwood column, entitled The Very Long View. In the article are some facts like the British equity prices reached peaks in 1906, 1936, 1968 and 1999 and the US in 1928, 1968 and 1999. And in 1974 British equities traded for just 30% of their real value at the end of the 19th century. There are other observations on Japan (Share prices in Tokyo are still trading at only a quarter of their 1989 peak) and on US real estate prices (in real terms, an index of American house prices rose from 100 in 1890 to 110 by the end of the 20th century. By the end of 2006, at the top of the housing boom, the index had reached 199). And, according to The Economist, the driver of the current decline is demographics.
OK, so this is more sophisticated doom & gloom than some financial crackpots. But the question I always asked myself was what would a somewhat clever working stiff in Japan in the 1960s through the 1980s do to optimize their investments? I suppose I could add British investors since the 1900s. All as a guide to what should I be doing now. Seems like a lower percent in equities is warranted and probably a good percentage (50%+?) in international stocks.
The figures in the article did seem to support that equities could be good in the long term but the long term is 30 year cycles and I, being 60, don't really have a 30 year investment horizon and demographics are not in favor of the boomers. But right now, cash & fixed income offer some pretty bleak returns. I manage my elderly mother in law's assets and I keep those very short. I also manage a fraternal organization assets which has 100 year+ horizon, so they can go very long but I figure on wanting to maximize my spending over the next 10 to 15 years, what to do?