Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 11:08 AM   #1
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Jeremy Siegel's "soothing" wall of worry

As we dread anticipate September, the gloomiest investment month of the year, it's always comforting to read an article by a veteran investor.

* * *"I believe that odds are about five to one against the U.S. falling into a recession over the next year. There is no doubt plenty to worry about, and pessimists point to two major risks in the economy: soaring oil prices and a severe housing slowdown.
* * *History shows that stocks have often climbed this 'wall of worry', amply rewarding investors who stay with equities. Uncertainty is one of the reasons why the stock market has over the long run been such a good investment and why stock returns have sported such a hefty premium return over fixed income assets."

__________________

__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 12:05 PM   #2
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Re: Jeremy Siegel's "soothing" wall of worry

I agree that equity will provide the best return in the long term. However, I am putting more than half of my assets into money market.
__________________

__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 12:08 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,199
Re: Jeremy Siegel's "soothing" wall of worry

I agree with him in general, but one sentence towards the end says:

"Professionals call the ever present risk facing investors the “Wall of Worry.” "

He's either not expressing himself well, or he doesn't understand how that term is normally used.

He's expressing it as something that is always there. *But the way I see it used is in a contrarian sense: When people are especially worried about the short-term future of the stock market, the market often goes up (climbing the wall of worry). *When everybody thinks things are great (no wall of worry), the market tends to go down. *IOW, the wall of worry is not ever-present.
__________________
Al
TromboneAl is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 12:42 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Jeremy Siegel's "soothing" wall of worry

I think that over the long term (many years) he is right. In the short term, a problem in the housing market will feed into the mortgage market, the largest, most liquid financial instrument market in the world. If there is a problem there, the stock market will be in deep do-do in short order. But unless this triggers a recession (unlikely), an October 1987 type instance will be a buying opportunity, not the start of a long, bad time.

How likely is a serious problem in the housing market? I dunno. But I would not be betting that things will be A-OK there. If nothing else, the worst of the bubble markets will be coming back to earth, although if it takes a few years it won't be as painful as it otherwise might be.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 12:55 PM   #5
Recycles dryer sheets
 
Join Date: Dec 2005
Posts: 137
Re: Jeremy Siegel's "soothing" wall of worry

Good comments everybody - they mirror mine. Dear old Bob Brinker is saying the same thing ... 'don't worry, be happy! The market will climb this wall of worry and go on to ever greater heights beyond ..."

No, I'm sorry. They (the ultra-Bulls) were all saying that back in 2000 too. If your on a train and see a herd of cows on the tracks ahead - sure they might get out of the way in time, but ...
__________________
danm is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 02:00 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: Jeremy Siegel's "soothing" wall of worry

Quote:
I am putting more than half of my assets into money market
d.m.t.* when things look gloomy (or rosy) it's comforting (worrying) to remember that the market cannot be predicted with any degree of reliability.
__________________
d is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 02:02 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
Re: Jeremy Siegel's "soothing" wall of worry

as the father of modern economics maynard keynes said" THE MARKETS CAN REMAIN IRRATIONAL ALOT LONGER THAN YOU CAN REMAIN SOLVENT"
__________________
mathjak107 is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 02:42 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: Jeremy Siegel's "soothing" wall of worry

Quote:
" THE MARKETS CAN REMAIN IRRATIONAL ALOT LONGER THAN YOU CAN REMAIN SOLVENT"
are the markets currently irrational?* if so, how do you know?* if not, how do you know?
__________________
d is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 02:49 PM   #9
Recycles dryer sheets
 
Join Date: Dec 2005
Posts: 137
Re: Jeremy Siegel's "soothing" wall of worry

OK, since we're pulling out well worn sayings, how about Stein's Law ...

Things that cannot go on forever, don't.

Trees don't grow to the sky forever, and neither do houses, stocks, bonds, whatever ...

And with regards to the idea that markets can't be predicted with any degree of reliability, hogwash. Everybody thought I was crazy to sell my house last summer. I didn't know how after living through the dot.com bubble, people could believe that housing was any different.
__________________
danm is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 02:51 PM   #10
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 151
Re: Jeremy Siegel's "soothing" wall of worry

Quote:
Originally Posted by Nords
As we dread anticipate September, the gloomiest investment month of the year, it's always comforting to read an article by a veteran investor.

* * *"I believe that odds are about five to one against the U.S. falling into a recession over the next year. . . . . ."
About the same odds you get in Russian Roulette if you don't spin the cylinder again after surviving the first trigger pull.
__________________
Hellbender
hellbender is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 03:02 PM   #11
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: Jeremy Siegel's "soothing" wall of worry

Quote:
About the same odds you get in Russian Roulette if you don't spin the cylinder again after surviving the first trigger pull.
... actually the same odds as the first pull ... on the second pull the odds are 4 to 1
__________________
d is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 03:03 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Re: Jeremy Siegel's "soothing" wall of worry

Quote:
Originally Posted by Nords
As we dread anticipate September, the gloomiest investment month of the year, it's always comforting to read an article by a veteran investor.

* * "I believe that odds are about five to one against the U.S. falling into a recession over the next year. There is no doubt plenty to worry about, and pessimists point to two major risks in the economy: soaring oil prices and a severe housing slowdown.
* * History shows that stocks have often climbed this 'wall of worry', amply rewarding investors who stay with equities. Uncertainty is one of the reasons why the stock market has over the long run been such a good investment and why stock returns have sported such a hefty premium return over fixed income assets."
All these guys have become brands. Siegel is the Don't Worry, Be Happy Brand; Prof. Shiller is the Don't Be Too Sure Brand.

As in any market situation, you buy what you think is most appropriate for your situation, or possibly one thing one day, and one thing another.

Laying aside any questions of valuation, I still find that stocks for the long run would only be relevant to a very young person, who intended to capitalize on the advantage provided by his youth by staying in the labor market for a good long time.

How comforting should it be to a 40 year old retiree to hear that stocks always produce real returns in any 20 year period? Think he is going to calm as he enters the 17th year and he is still down? How about 18th?

And Siegel misunderstands the meaning of history when he says :”History shows that …” The only thing that history shows is what happened in the period under review.

Ha

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 04:04 PM   #13
Recycles dryer sheets
 
Join Date: Dec 2005
Posts: 137
Re: Jeremy Siegel's "soothing" wall of worry

Well said. I'm rather cautious, when I was young and the ideal candidate for long term stock investing, I did. Didn't make much money at it, if anything. My 401k for instance has, I believe, just broke water after 15 years of investing. Would have been better to keep it in a MM. The problem with the 'stocks for the long run' crowd is everybody has a horizon, which obviously gets shorter as time goes on.

I'll retire early, really early, but I made my money by getting lucky in this last RE bubble, having a high paying job, and by saving my ass off.

Quote:
Originally Posted by HaHa
All these guys have become brands. Siegel is the Don't Worry, Be Happy Brand; Prof. Shiller is the Don't Be Too Sure Brand.

As in any market situation, you buy what you think is most appropriate for your situation, or possibly one thing one day, and one thing another.

Laying aside any questions of valuation, I still find that stocks for the long run would only be relevant to a very young person, who intended to capitalize on the advantage provided by his youth by staying in the labor market for a good long time.

How comforting should it be to a 40 year old retiree to hear that stocks always produce real returns in any 20 year period? Think he is going to calm as he enters the 17th year and he is still down? How about 18th?

And Siegel misunderstands the meaning of history when he says :”History shows that …” The only thing that history shows is what happened in the period under review.

Ha

__________________
danm is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-04-2006, 08:08 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: Jeremy Siegel's "soothing" wall of worry

Quote:
The problem with the 'stocks for the long run' crowd is everybody has a horizon, which obviously gets shorter as time goes on.
as lord john maynard keynes said: in the long run we're all dead
__________________
d is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-05-2006, 09:09 AM   #15
Thinks s/he gets paid by the post
saluki9's Avatar
 
Join Date: Feb 2005
Posts: 2,032
Re: Jeremy Siegel's "soothing" wall of worry

This thread is amazing! In only one page we have managed to use just about every market related cliche

I'm really impressed
__________________
saluki9 is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-05-2006, 09:18 AM   #16
Full time employment: Posting here.
 
Join Date: Apr 2006
Posts: 944
Re: Jeremy Siegel's "soothing" wall of worry

What goes up...will come down. Now we got em all
__________________
Freed at 49. You only live once - live it
Donzo is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-05-2006, 10:28 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,409
Re: Jeremy Siegel's "soothing" wall of worry

Ah hem!

You guys forgot Geraldine - "Dividends Don't Lie".

And with a name like Weiss - I suspect she may not be Norwegian.

Heh heh heh heh heh - get the dividends auto deposited to checking and then you can worry your heart out.
__________________
unclemick is offline   Reply With Quote
Re: Jeremy Siegel's "soothing" wall of worry
Old 09-05-2006, 11:27 AM   #18
Recycles dryer sheets
 
Join Date: Dec 2002
Posts: 129
Re: Jeremy Siegel's "soothing" wall of worry

Quote:
Everybody thought I was crazy to sell my house last summer
Seriously?

Last summer we sold to downsize and the prevailing opinion from coworkers, neighbors, friends, family, message boarders etc. was that we were getting out at the right time because the runup had peaked.

Sure didn't encounter anyone thinking it a crazy move.
__________________

__________________
WRBT is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Has anyone read Jeremy Siegel's book? Spanky FIRE and Money 2 05-22-2005 11:15 PM

 

 
All times are GMT -6. The time now is 04:20 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.