Length of time to recover our lost money?

[Orchidflower]

Some of the people with financial backgrounds probably can guesstimate this one, but I understand that, during the Great Depression starting in 1929, those who left their money in stocks took alllll the way to 1954 to recoup the losses. Please correct me if I am wrong on that statement.
Anyway, is it going to take another 25 years to recoup all the losses many of us are taking right now, too? I am assuming so, but would love to hear what the finance professionals here think.

 

[haha]

Some of the people with financial backgrounds probably can guesstimate this one, but I understand that, during the Great Depression starting in 1929, those who left their money in stocks took alllll the way to 1954 to recoup the losses. Please correct me if I am wrong on that statement.
Anyway, is it going to take another 25 years to recoup all the losses many of us are taking right now, too? I am assuming so, but would love to hear what the finance professionals here think.

I am not financial professional, and of course it will depend on what each individual owns, but I very strongly doubt that large aggregates like the Dow will be down anywhere near that long.

IMO, there are some amazing bargains around in companies that essentially cannot disappear.

ha

 

[youbet]

but I very strongly doubt that large aggregates like the Dow will be down anywhere near that long.

I'd vote for less than 25 yrs too, but certainly much longer than just a quick 2 - 3 year snap-back where we're sitting here in the autumn of 2011 talking about how glad we are that that's over with!

This assumes that during the next decade or so we solve major issues such as energy, water, food, inbound immigration, terrorism and the resulting cost to keep it in check, etc. Otherwise, we've just experienced a permanent adjustment downward in our aggregate wealth that won't abate ever, at least in terms of our lifetimes......

 

[Midpack]

Sorry this is so vague, but last week I heard on CNN or FoxNews that Goldman Sachs was predicting the DJIA would be up 30% in the next 8 months and 40% in the next year. Wouldn't that be nice! Unfortunately, I've Googled to find verification --- without success...

 

[Orchidflower]

I saw on another post on this board regarding Suze Orman that she says this will be an L shaped recession--returning on the upswing around 2015. She could be right as every article on Marketwatch or from the Wall St. Journal--or any other media tv show or paper I have been able to get my hands on--says we will bottom somewhere around March or April of 2009 with a very slight upturn after that; so, we could just lope along until 2015 or longer.
...all I know is that I am a very unhappy camper lately...as in VERY....

 

[mathjak107]

im betting on new high within 5yrs.... i hope!

 

[dex]

I track my net worth on a annual basis.
I'm working on my projections now.
I'm estimating from 1/1/09 to 12/31/15 should equal 1/1/08 - so 7 years
#s after living expenses.

 

[73ss454]

Well, if I was smart enough to get out before this mess I'd be able to predict the recovery. Since I'm still all in, I'll pass on any predictions.

 

[chinaco]

There is a mountain of money on the sideline now. Eventually people will be wanting to get the money earning again. And I expect that to be sooner than later.

However, for large cap indexes get back to the previous high the last time took almost 7 years from when the decline started.

I think investor will move money back in in the next 12 months if things stabilize. But meaningful gains are probably a ways off. The S&P 500 almost has to double to get back to its high.

 

[old woman]

I think it will happen pretty quickly and those on the sidelines will see it up a few weeks then wait to see if it is truly going up then get in after the main upswing. People are putting money in 401K and IRA or ROTH and will not all stop yet those trying to live on investments will pull out less. Some of us will work years longer to be sure we have plenty in spite of this setback. For those of us not yet retired but about ready this was a good wake up call not to count on high returns and really think about risk tolerance. I have a very high risk tolerance and even with this downturn haven't considered selling low.

 

[ziggy29]

I'm going to say this for the umpteenth time.

If you reinvested dividends, your break-even point from the 1929 peak would have occurred in 1944, NOT 1954.

 

[TromboneAl]

I'll also wager that if you rebalanced regularly, you would have recovered more quickly.

I cannot seem to understand what an "L shaped recession" means. Anyone?

 

[Khan]

I'll also wager that if you rebalanced regularly, you would have recovered more quickly.

I cannot seem to understand what an "L shaped recession" means. Anyone?

Down sharply
Stay low
Stay low
Stay low
Stay low
Up sharply

 

[haha]

I'm going to say this for the umpteenth time.

If you reinvested dividends, your break-even point from the 1929 peak would have occurred in 1944, NOT 1954.

Not to quibble, but in what sense is a retiree re-investing dividends? Quite the opposite- she is usually taking out more than dividends in living expenses.

There are many places to learn how to save and make money, but not very many devoted to living off that money.

Ha

 

[Fastfade]

Warren Buffett was recently quoted saying that in 5-10 years we would look back on this period and the extraordinary buys available at this time.

No surprise there but I think it's worth noting he did not say 3-5 years

 

[ziggy29]

Not to quibble, but in what sense is a retiree re-investing dividends? Quite the opposite- she is usually taking out more than dividends in living expenses.

If you had 15 years in a safe "bucket" for income, then you would have been able to reinvest all the dividends because you wouldn't be selling stocks for income for many years. This is one of the benefits of a "buckets of money" type of approach to asset allocation in and approaching retirement.

Plus, I didn't think the scenario we were talking about was strictly within the context of someone already retired.

 

[haha]

Very important to realize that what people usually say reflects their prejudices and failure to understand reality, much more than it has any meaning that reflects the outside world.

One of the reasons that world leaders are trying so hard to contain this mess is that a real business collapse would lead to severe social and political dislocation in almost all countries.

 

[dex]

I'll also wager that if you rebalanced regularly, you would have recovered more quickly.

I cannot seem to understand what an "L shaped recession" means. Anyone?

RGE - The US Recession: V or U or W or L-Shaped?

 

[Orchidflower]

Ziggy29: The article I read must have meant without reinvesting then. Thanks for the input. I have it recorded, and, at least, you won't have to correct me again. Got it!

 

[Meadbh]

Warren Buffett was recently quoted saying that in 5-10 years we would look back on this period and the extraordinary buys available at this time.

No surprise there but I think it's worth noting he did not say 3-5 years

In 10 years WB will be 88 years old. He doesn't have to plan for 40 years of ER. He has a huge NW even now and cannot possibly run out of money during his lifetime. How does this affect his risk tolerance?

 

[Meadbh]

L is like U without an uptick.

 

[aaronc879]

Well, for the sake of this question, lets assume we hit bottom last week. If that's the case then I need my portfolio to go up 50% to break even. I believe that the market(overall) is very undervalued and therefore will go up rather quickly. I think it should take less than 4 years to go up 50%.

 

[REWahoo]

"The US Recession: V or U or W or L-Shaped?"

I'm hoping for a /-shaped recession...

 

[Coach]

Orchidflower, our situation is so unlike the 1929 crash, at least so far, that I don't think you can look at it for much information about the future. The DJIA bottomed out in 1932 having dropped 89% from it's 1929 high. wikipedia We'd have to get to a DJIA of around 1600 to compare to that.

After the 1987 crash of 31%, the DJIA recovered in two years. wikipedia

The Case for Stocks as a Long-Term Investment is an interesting article from Charles Schwab that compares the current situation to the great depression and talks about stock recovery after the 10 recessions since WWII.

Coach

 

[TromboneAl]

L is like U without an uptick

That is, we'll be in a recession forever.