 Quote:
|
Well, stocks have value for me when they are the only way I see to achieve my financial goal. *Even at today's P/E and low dividend yields, the Gordon Equation predicts a long term return of about 7% nominal per year. *Long term bonds should return about 5% over the long term at today's yield. With my financial resources I can't get there from here without a substantial commitment to equities.
|
I have to say I am puzzled by this. In no way am I criticizing your choices, but didn't you say you were 71 years old? And that you operate a laundromat? You worked *a pretty full career, so you must have OK good social security, as well as what your wife draws on your record. I believe you own a home, and you and your wife can live well on $40,000. Your SS and laundromat must cover that, and then some.
Another thing is that there is a logical problem with saying "I will buy stocks because it's the only way I can get where I want to go" Stocks can't be the "only way", if they may well not even be "a way". Whatever the Gordon equation might predict going forward from here, it might be totally swamped by volatility. And not just short term volatility.
Imploding bubbles take a long time to deflate, and there is at least a good chance that what we now have is an imploding bubble, notwithstanding the recent rally in the NASDAQ, and even more recently the S&P.
After the crash of 1929, it took until the Battle of Midway before any lasting climb started in the NYSE.
More recently, the Nikkei peaked in 1989. More than 15 years later, it is still trying to build a base. While the Nikkei was more overvalued in '89 than the S&P in 2000, the opposite is true of the 1929 crash and ensuing implosion.
None of my reasoning is based on bad things about to happen. I ignore the war. I ignore the dollar. I ignore the huge twin US deficits. I ignore China's rapid industrialization. I ignore the existence of nuclear weapons in terrorist friendly nations. I ignore Palestine; I ignore Israel.
If the world looked like peaches and cream, the markets are still overvalued. If Greenspan can keep interst rates down, maybe they will stay overvalued. But I think the longest of long shots is that a strong lasting advance will start from today's levels.
IMO, the strongest play is the one that allows you to keep playing.
Mikey
__________________
Above all, humans are political animals.
Nota bene: I am either a moron or an idiot. So don't pay any attention to anything I say or you are one too. Please consult your financial advisor, astrologer or proctologist for whatever it may be that you are seeking.
|