Overconfidence In Market?

[marko]

What a glum thread!

But lets also remember that during the Great Depression there were people (my grandfather among them) who made a fortune. Not everyone was destitute. IIRC unemployment was 25% meaning 75% still had jobs.

I'm not saying it wasn't horrific but there were opportunities out there. Please! I'm not trying to be provocative or minimize people's pain at the time...let's not go down that path!!

Again, I suspect that were it not for the modern controls in place, 2008 could've been worse than 1929 but for a number of reasons it was kept in check. While we must learn from it, I just don't see us able to compare today's modern markets with 1929.

How many of us here on this forum took advantage of stock or real estate opportunities during the '08-'09 ("end of the world as we know it") period? I sure did.

As an aside, my great-grandmother dropped dead on October 29, 1929 when her husband came home and told her the banks were closed. Right there in the hallway...so it wasn't all sunshine for her son, my grandfather.

 

[COcheesehead]

Could either of you link to a source like I did? Thanks!! Much appreciated.

https://www.investopedia.com/features/crashes/crashes5.asp

From the link...
A string of terrible days led to a more than 40% drop in the market from the beginning of September 1929 to the end of October 1929. In fact, the market continued to decline until July 1932 when it bottomed out, down nearly 90% from its 1929 highs.

 

[RunningBum]

I like the balance brought by a doom and gloomer like the OP. I don't think things will get that bad, but it does remind me that my plan should handle really bad cases. Just because we don't want to hear it doesn't mean it can't happen.

 

[24601NoMore]

The great depression started in 1929 but continued for years, with stocks falling nearly 90% through 1932 before things began to stabilize.

Here's a good post on BH from a 95-year old member with more data on year by year returns in the 1929-1932 meltdown (89%) as well as the 46% drop between 1973 and 1976. He also shares some good experience on what living through a "real" bear market is like..I especially thought this part was relevant..

Figures cannot convey the horrifying and debilitating effects of a bear market. You watch in agony as month after month your life savings evaporate before your eyes. Gloom and doom talk is everywhere. Nearly everyone else is selling. You have no idea when, or if, your portfolio will stop losing money.

Your friends and relatives urge you to sell. Nearly all financial experts recommend "sell". You are ridiculed for trying to hold on. You begin to have self-doubt. Despair sets in. Buying stocks is unthinkable. Suicides increase. That's a REAL bear market.

This is why many people in retirement have 40-70% in bonds.

I'm slightly south of 30% in equities (need to update the spreadsheet to see exact % and have not gotten to it recently), and even THAT is making me apprehensive for reasons mentioned previously. To each their own, but seeing as many posts as I have where such relatively high equity allocations are being mentioned for people in or near ER is alarming..

 

[pb4uski]

Could either of you link to a source like I did? Thanks!! Much appreciated.

I found this..... looks like a 90% drop to me.... from a little short of 6,000 to below 1,000. That said, my understanding is that much of the drop and economic carnage it caused was due to irrational exuberance and borrowing money on margin to invest in the market... when the market went down 25% the margin calls started and people were wiped out and having to pay their margin loans resulted in other economic pressures. Margin lending reforms in the aftermath will prevent that sort of depression in the future (not that investors can't borrow money with other collateral for investment).

 

[Ready-4-ER-at-14]

I always find an index graph as a representative but not necessarily accurate portrayal of market conditions.
My question is if an index was down 90% over say 4 years, how many of the original stock are still in that index? In other words would the index have a survivorship bias as it shows only the survivors and the newly added?

 

[Scrapr]

..

Thread jack....24601no more I just googled your user name thinking it was zipcode.Was I surprised at Les Miserables reference. Interesting. A clip for reference

https://youtu.be/I8WSysB5vKM

 

[RunningBum]

I always find an index graph as a representative but not necessarily accurate portrayal of market conditions.
My question is if an index was down 90% over say 4 years, how many of the original stock are still in that index? In other words would the index have a survivorship bias as it shows only the survivors and the newly added?

https://en.wikipedia.org/wiki/Historical_components_of_the_Dow_Jones_Industrial_Average shows you the turnover. Specific to this downturn:

1/29/30:
North American was replaced by Johns-Manville.

7/18/30:
American Sugar, American Tobacco, Atlantic Refining, Curtiss-Wright, General Railway Signal, Goodrich, and Nash Motors
replaced by
Borden, Eastman Kodak, Goodyear, Hudson Motor, Liggett & Myers, Standard Oil of California, and United Air Transport.

5/26/32:
Hudson Motor, Liggett & Myers, Mack Truck, NCR, Paramount Publix, Radio Corp, Texas Gulf Sulphur and United Air Transport
replaced by
American Tobacco, Coca-Cola, Drug Inc., International Shoe, IBM, Loew's, Nash Motors, and Procter & Gamble.

I don't know how much this actually alters the index. Presumably those that are dropped have fallen off quite a bit already. They may go under, but they may recover after the removal. Those added have almost certainly had a nice run up to get in. They are probably considered to be in good shape to continue doing well, but perhaps the highest growth is over.

Interesting that three of the stocks added in 1930 were removed in 1932, and two of the stocks added back had been removed in 1930. While there was some thinning of the herd and adding stronger companies in 1930, there may have been some "buy at the peak, sell at the bottom" going on as well.

 

[Running_Man]

I highly recommend "The Great Depression, A Diary" By Benjamin Roth for a good take on what it was like to live through the great depression.

1929 came when many people were in the stock market but not even a majority, and confidence in investing was not shaken in October 1929. Depressions, as they called recessions then, had occurred enough that many bought stocks through the original decline, some on margin. The second leg down in 1930 hurt a great many rich individuals more than the original drop and so houses and apartment buildings began to go up for sale in the early thirties. As prices of houses dropped banks began to feel the pressure and started to close, stopping access to people who had not invested in the market. Bank stocks prior to 1929 were considered the best investments because of the safety assumed in their caretakers as stockholders were responsible for an additional 100% of the price paid for the stock in times of default. So that if one invested $1,000 in a bank stock if the bank went bankrupt the stockholders owed an additional $1,000. This destroyed many investors who were among the most prosperous in the late 1920's.

A market in individual depositor bank books at up to 50% off sprang up when banks closed and would not allow access to the funds. Prices for all items collapsed since there was no money in the economy and farmers went on strike because the market price of the goods did not cover expenses. Business output in the steel industry fell to 15% by late 1932.

By December 1932 the economy had improved enough to where one could get 72% of their savings on the bank books, while some of the less strong banks were selling for 62 cents. In an economy where jobs were scarce, savings could not be accessed the reality was if you had stocks in many cases you had no choice but to sell. The market turned around in 1932 as the economy began to improve and the forced selling stopped, leaving a gradual uptick in buying that lasted to 1937, there was no high volume surge in smart money into stocks, it was the finality of obliteration of all the "early" smart money.

This is 3 years after the crash, if you had money in the bank it did not matter, you could not access it to buy stocks if you wanted to unless you'd sell your cash for 60-70% on the dollar. And most people with the risk appetite to do so had already failed in their attempts. Even after the bank holiday all the money that was allowed to be withdrawn was NEW deposits not old deposits. The stories heard about having all the money in a mattress was a result of going through this period and having cash in the bank saved over the years but the frustration of not being able to access it when it was most needed. I personally know a girl who bought a house in the early 1980's from the estate of an old widow who died and when she and her boyfriend remodeled they found over $40,000 in the walls of the house they paid $38,000. The widow and her former husband were probably in late 20's through the 30's during the time period and obviously that effected them greatly and they wanted access to money always as being the most important element.

As the economy went through an upturn, the average person began to do better and eventually the old bank books were honored. Those that purchased at a discount did very well, but for most the third down leg from 1937-1939 wiped out most of the progress until WWII around 1942 and then if you were lucky enough to live through that you saw a continual uptrend in living conditions which has continued to this day.

If one had the money you could have bought the entirety of downtown Youngstown Ohio for the back taxes owed in 1932.

Current practice of the central banks implies stock market declines are the cause of recessions and not the other way around so defending the markets against price declines is the most urgent of necessities for continued economic growth. The great depression is merely a decline in markets that eventually would have led to great wealth if a program of continual investment of 70% of your portfolio to stocks been maintained, Nobel Prizes have been earned with such studies. This has led to a public confidence in stock markets that is unprecedented. The major purchasers of bonds are Central Banks, banks themselves and other financial institutions. There are precious few individuals who truly believe a 90% decline is even possible. So individuals own stocks, governments own bonds and we depend on the judgement of governments to defend the value of our stocks, which the central banks view as integral to upholding the economy and by extension the value of their bonds held which funds the economic expansion that allows this process to continue, hopefully forever.

It must be very interesting to be a central banker today.

 

[24601NoMore]

Thread jack....24601no more I just googled your user name thinking it was zipcode.Was I surprised at Les Miserables reference. Interesting. A clip for reference

https://youtu.be/I8WSysB5vKM

Yep - that's the inspiration for the handle..Jean Valjean was a slave (with prisoner number 24601 - they never referred to him by name, but by number) in a French prison for the 'crime' of stealing a loaf of bread to feed his sister's dying child. He was a prisoner for many years only to gain freedom and go on to live a very fulfilled life..

In a way, I did see a parallel of sorts to how much of my own life I gave up over 35+ years of being a different type of prisoner - to the w*rk world, 24x7 expectations, management who thinks that they own your entire life, etc. 24601NoMore is saying that like Jean Valjean, I'm no longer a slave..hopefully, I'll go on to have a similar type of significant and positive impact on things with my newfound freedom, as the character in LesMis surely did.

 

[Markola]

Maybe “certain doom and gloom” is “herd thinking”? How many of us have 100% of our assets in the Dow 30, which we bought on margin (notwithstanding the poster above who leveraged his home to buy stocks)? Some asset classes will always zig while others zag. That’s why I have a 50/50 globally diversified portfolio of index funds, no debt except a 4.1% mortgage I could pay off today, and a willingness to downsize lifestyle if ever needed. We will have bull and bear markets for U.S. stocks, which is why people should diversify. I have little faith in the market but lots of faith in the markets.

My own great grandfather, a pharmacist in rural Georgia, bought up cheap forest land during the Great Depression, totaling over 6,000 acres and other businesses when he died in the 1950s. Investors in bonds did fine during the Depression. This article is about another man who doubled his money during the Depression and continued to do well through a lot of subsequent historic certain doom and gloom in the news media, most of which never materialized and which he ignored.

https://www.telegraph.co.uk/finance...money-in-1929-crash-and-Im-still-winning.html

 

[RunningBum]

This article is about another man who doubled his money during the Depression and continued to do well through a lot of subsequent historic certain doom and gloom in the news media, most of which never materialized and which he ignored.

https://www.telegraph.co.uk/finance...money-in-1929-crash-and-Im-still-winning.html

Note that the way Kahn doubled his money in the depression was by borrowing money to short sell some stocks. Huge risk, and he actually counted on doom and gloom happening and taking advantage of it. He not only had to be right, but he had to time it right. Are you suggesting we should be doing the same? Or what is the point here?

 

[Sunset]

My parents were very risk adverse, fairly poor, always rented.
I'm sure part of it was due to my grandmother using stock certificates to wall paper the bathroom during the Great Depression.
It was probably cheaper than buying wallpaper

 

[JimBob]

As I stated previously, I'm not an investment advisor, so your opinion is as valid as mine. That said, I think folks first need to put their house in order to weather what I'm describing. That means paying off as much debt as possible, if you have a mortgage make sure its at a fixed rate, if you have car debt pay it off. Prioritize debt elimination over investing in a long in the tooth market.

If you paid off your house, or have a fixed rate and little car debt, you have insulated a large portion of your expenses from inflation. If you have a Cola'd pension, or Social Security, you have protected a large portion of your income from inflation. What is left over after these two, is your real exposure to inflation.

In other words, put yourself into a position where deflation, hyperinflation, whatever, it doesn't matter, you can meet your obligations and keep food on the table.

Early retirement is all the rage, and I'm all for it. But if someone is dependent on positive market returns, especially what we have seen over this Bull, to sustain them in retirement, I wonder if they should be retired.

I don't think its a coincidence that the concept of early retirement has taken off in the last few years, at the tail end of the greatest bull market in history. Early retirement wasn't a concept between 1929 and 1954.

In terms of specific investments, remember that with bonds you are guaranteed your money back if you hold to maturity. Thus nominally, you will not lose a cent. It is true, as you state, that in an inflationary environment you would lose value in real terms. And in hyperinflation it would be a lot of value. But that can be mitigated by laddering the duration of your bonds. With short term bonds, currently paying in the 2 percent range, in an inflationary environment you can roll out to a new bond paying the higher coupon that would likely exist in an inflationary environment.

Hyperinflation or deflation won't happen overnight, its a process, so we will have time to make adjustments to our portfolios. But the market can have crushing swings like 1929, like 1987, after which you will be adjusting a much smaller portfolio.

Bottom line, if what I describe happens, no one will be able to hide. The best investment will have already occurred: being prepared financially to weather the storm, no matter the severity. See the excellent posts describing what happened during the depression. Debt, and being dependent upon a uncertain income stream--either a job you could lose or equities that could crash--was what put people on the street and in the soup lines.

Thus my concern that folks on the forum, conditioned by this bull, may have become overconfident that the market will support them in retirement.

But as I said, your opinion is as valid as mine.

 

[target2019]

If you paid off your house, or have a fixed rate and little car debt, you have insulated a large portion of your expenses from inflation. If you have a Colad pension, or Social Security, you have protected a large portion of your income from inflation. What is left over after these two, is your real exposure to inflation.

I think you're preaching to the choir here. There are probably polls which show the majority of E-R followers have little or no debt. Plenty of pensioners, too, is my best guess, based on reading many threads.

 

[haha]

As I stated previously, I'm not an investment advisor, so your opinion is as valid as mine. That said, I think folks first need to put their house in order to weather what I'm describing. That means paying off as much debt as possible, if you have a mortgage make sure its at a fixed rate, if you have car debt pay it off. Prioritize debt elimination over investing in a long in the tooth market.

If you paid off your house, or have a fixed rate and little car debt, you have insulated a large portion of your expenses from inflation. If you have a Cola'd pension, or Social Security, you have protected a large portion of your income from inflation. What is left over after these two, is your real exposure to inflation.

In other words, put yourself into a position where deflation, hyperinflation, whatever, it doesn't matter, you can meet your obligations and keep food on the table.

Early retirement is all the rage, and I'm all for it. But if someone is dependent on positive market returns, especially what we have seen over this Bull, to sustain them in retirement, I wonder if they should be retired.

I don't think its a coincidence that the concept of early retirement has taken off in the last few years, at the tail end of the greatest bull market in history. Early retirement wasn't a concept between 1929 and 1954.

In terms of specific investments, remember that with bonds you are guaranteed your money back if you hold to maturity. Thus nominally, you will not lose a cent. It is true, as you state, that in an inflationary environment you would lose value in real terms. And in hyperinflation it would be a lot of value. But that can be mitigated by laddering the duration of your bonds. With short term bonds, currently paying in the 2 percent range, in an inflationary environment you can roll out to a new bond paying the higher coupon that would likely exist in an inflationary environment.

Hyperinflation or deflation won't happen overnight, its a process, so we will have time to make adjustments to our portfolios. But the market can have crushing swings like 1929, like 1987, after which you will be adjusting a much smaller portfolio.

Bottom line, if what I describe happens, no one will be able to hide. The best investment will have already occurred: being prepared financially to weather the storm, no matter the severity. See the excellent posts describing what happened during the depression. Debt, and being dependent upon a uncertain income stream--either a job you could lose or equities that could crash--was what put people on the street and in the soup lines.

Thus my concern that folks on the forum, conditioned by this bull, may have become overconfident that the market will support them in retirement.

But as I said, your opinion is as valid as mine.

Why is this your concern? It may well be true, or possibly not, but why does it concern someone who just arrived here, and who perhaps knows no one here?

The answer may be obvious to some, but overall it seems to me that most people can pretty easily survive others' financial mishaps.

 

[W2R]

Thank you, everyone, for providing the links, graphs, and information about a 90% drop over 3 years from 1929-1932. I am so glad to get all of this terrific input! Now I can correct my prior post using a 90% drop instead of 25%.

As I mentioned, I still feel like conservative, diversified investing is a reasonable thing to do in the long term.

Sorry that this post is all "me me me", but I don't know anybody else's situation in as much detail as I know my own situation and here is why I am not freaking out about possible stock market crashes.

1) OK, let's go with a 90% drop due to the Great Depression.

2) Only 42% of my portfolio is invested in equities anyway; 58% is in cash and bonds, so if we lost 90% of equities tomorrow and bonds/cash remained the same, then I would still have 62.2% of my portfolio's value today.

3) Right now, I have been retired and spending money from my conservatively invested portfolio for 10 years. As of today I have 137% of what I started out with in 2009.

4) Given a 90% drop, then I am thinking that if we had a crash of the severity seen in 1929 then the very next day I would still have 85% of what I had when I first retired. My future withdrawal rates would increase, since my nestegg would be lower than it presently is. It looks like even my highest WR of the past 10 years (2.61%), would have changed to a WR of 2.96% given the lower portfolio amount. Last year I withdrew much less due to the onset of SS, so my WR for last year would have had to change from 0.60% to 0.94%.

5) And as I mentioned, SS and pension have kicked in by now, and cover almost all or all of my expenses (at last!) so I have made it past the bend in the curve.... all of this is so much less crucial than it was at the beginning of ER.

I'm still not feeling the urge to run in circles, scream and shout at the prospect of withdrawing somewhere between 0.94% - 2.96% in 2022 due to a three year drop like the Great Depression (starting today).

Sequence of returns thus far, the onset of social security, and finally old ingrained LBYM habits apparently would save the day. I mean really, I am quite honestly TRYING to Blow That Dough but it just isn't happening.

 

[RunningBum]

In terms of specific investments, remember that with bonds you are guaranteed your money back if you hold to maturity. Thus nominally, you will not lose a cent.

Guaranteed by who? If it's the US government, sure, that's pretty reliable, though haven't there been state and city governments that have defaulted on bonds? Is it totally out of the question in terrible times for the US government to default? And if they don't, they may be printing money as fast as they can, which greatly devalues the face amount of the bond.

If they are corporate bonds, all guarantees are off.

In the previous post you referred to, didn't they say people were only getting 60-70 cents on the dollar for money they had in banks? Where's the safety?

Like I said earlier, I'm all for trying to evaluate worst case scenarios, but let's not pretend that only the stock market gets slammed and all other investment types come out smelling like roses.

 

[NW-Bound]

... I'm all for trying to evaluate worst case scenarios, let's not pretend that only the stock market gets slammed and all other investment types come out smelling like roses.

+1000

 

[NW-Bound]

Note that the way Kahn doubled his money in the depression was by borrowing money to short sell some stocks. Huge risk, and he actually counted on doom and gloom happening and taking advantage of it. He not only had to be right, but he had to time it right. Are you suggesting we should be doing the same? Or what is the point here?

I did not know about Irving Kahn, and how he made his fortune betting against the market prior to the Great Depression.

But I am among many more people who know how the late John Templeton made money by buying 100 shares of each NYSE listed company which was then selling for less than $1 a share. And it was just one of the things he did to become a billionaire. There were no index funds then, and if there were I believe Templeton would have just bought one to save on transaction costs.

By the way, Templeton was born in 1912, and would be 107 today if still alive. So, he was born a few years later than Irving Kahn.

 

[Running_Man]

Thank you, everyone, for providing the links, graphs, and information about a 90% drop over 3 years from 1929-1932. I am so glad to get all of this terrific input! Now I can correct my prior post using a 90% drop instead of 25%.

As I mentioned, I still feel like investing is a reasonable thing to do in the long term.

Sorry that this post is all "me me me", but I don't know anybody else's situation in as much detail as I know my own situation and here is why I am not freaking out about possible stock market crashes.

1) OK, let's go with a 90% drop due to the Great Depression.

2) Only 42% of my portfolio is invested in equities anyway; 58% is in cash and bonds, so if we lost 90% of equities tomorrow and bonds/cash remained the same, then I would still have 62.2% of my portfolio's value today.

3) Right now, I have been retired and spending money from my conservatively invested portfolio for 10 years. As of today I have 137% of what I started out with in 2009.

4) Given a 90% drop, then I am thinking that if we had a crash of the severity seen in 1929 then the very next day I would still have 85% of what I had when I first retired. My future withdrawal rates would increase, since my nestegg would be lower than it presently is. It looks like even my highest WR of the past 10 years (2.61%), would have changed to a WR of 2.96% given the lower portfolio amount. Last year I withdrew much less due to the onset of SS, so my WR for last year would have had to change from 0.60% to 0.94%.

5) And as I mentioned, SS and pension have kicked in by now, and cover almost all or all of my expenses (at last!) so I have made it past the bend in the curve.... all of this is so much less crucial than it was at the beginning of ER.

I'm still not feeling the urge to run in circles, scream and shout at the prospect of withdrawing 2.96% in 2022 due to a three year drop like the Great Depression (starting today).

Sequence of returns thus far, the onset of social security, and finally old ingrained LBYM habits apparently would save the day. I mean really, I am quite honestly TRYING to Blow That Dough but it just isn't happening.

It is the assumption that Bonds/Cash would stay the same in a circumstance similar to 1929 - 1932 that you would not really feel an impact that is doubtful. AAA rated bonds that stayed AAA and US government debt did very well and are used in most studies as the bond component for comparison. There was no indexing during the great depression, so the reality was many bond holdings became worthless. at 16% of GDP there were just not that many US treasury bonds held. The value of the stock market loss in October 1929 of 30 Billion was twice the national debt. For a similar circumstance the 34 trillion in stock market valuation is supported by 3-4 times the government debt.

Now with indexing investment grade bonds of the lowest rung make up 50% of investment grade bonds as index investing does little to distinguish in investing whether the company is Apple, Walmart or Boston Scientific which despite being BBB only garners a 3.5% interest rate on 10 year bonds vs 3.1% Walmart pays for being AA , as a matter of fact a company's stock is probably punished by not leveraging right up to the BBB- grade by performing stock buybacks and increasing the leverage in the market which does not carry much of a financial burden.

From Standard and Poor Definitions:

'AA' stress scenario. An issuer or obligation rated 'AA' should be able to withstand a severe level of stress and still meet
its financial obligations. Such a scenario could include GDP declines of up to 15%, unemployment levels of up to 20%,
and stock market declines of up to 70%.

'BBB' stress scenario. An issuer or obligation rated 'BBB' should be able to withstand a moderate level of stress and still
meet its financial obligations. A GDP decline of as much as 3% and unemployment at 10% would be reflective of a
moderate stress scenario. A drop in the stock market by up to 50% would similarly indicate moderate stress.

If the stock market fell 90% the government would not have the cash flow to continue current social security payments. And while I agree that W2R's retirement portfolio is solid and more likely than not can weather any storm, if the market were to fall 90% the contagion effects are not predictable but I believe passive bond funds will be devastated by the 50% makeup of BBB rated companies. Most pension funds would default, it would by definition mean the central banks would no longer be a functioning body and new and interesting events would be occurring. So while this is a big issue, this is the scenario that the central banks have been working to contain since 2008 and why we have historic low interest rates (15 trillion government bonds worldwide are negative right now) to fuel an economy near full employment.

An interesting note on debt from 1929 to 1940 is that in total by 1940 while US government debt doubled private debt shrank by 25 percent so that in total, the total US debt was the same in 1940 at around 170 Billion dollars.
https://fraser.stlouisfed.org/files/docs/publications/SCB/pages/1940-1944/46398_1940-1944.pdf

 

[marko]

Thus my concern that folks on the forum, conditioned by this bull, may have become overconfident that the market will support them in retirement.

I think the folks on this forum--of all people--have it figured out better than just about anyone out there.

Seems to me that the OP came here asking what we think and then pivoting to lecturing us on what we already know.

Early retirement wasn't a concept between 1929 and 1954.
.

I can think of quite a few.

 

[NW-Bound]

I dunno how my stash will survive a doomsday scenario, but long-time people here know I used to half-jokingly describe my humble class-C motorhome as my housing of last resort, should things become so bad that I lose my 2 stick-built homes.

Some thought that I was a scaredy cat, but I simply amused myself about how I would survive in a most terrible scenario.

 

[Aerides]

Thus my concern that folks on the forum, conditioned by this bull, may have become overconfident that the market will support them in retirement.

I don't share that concern. I think most folks here are rightly cautious about the bull, remember 2009 very well (and 2000 and 1991 and 1987 for that matter.)

As a group, I think we are all very aware that what goes up comes down, but also have strategies to allow us to live through such events, quite simply, having an AA that allows us to ride out most any storm so as not to sell in a down market.

And a I think a lot of members are a lot more fiscally conservative than the majority of frequent posters. Most here are probably more 50/45/5 than 70/30, and a whole bunch are probably more 30/70, or focused on RE income. Or have supplemental pensions.

By and large, I would not consider us an overly optimistic, or overconfident group.

 

[NW-Bound]

John Templeton began his investing career in 1939 at age 27 AFTER the great depression by borrowing money (leveraging when it finally worked because at that point it had been impossible to garner money to invest in stocks just living was hard enough) at the perfect time to buy 100 shares in 104 companies at less than a dollar share price, not the whole market in fact Templeton did not believe in whole market investing From John Templeton's 10 rules of investing Rule #6

Yes, Templeton started investing long after the onset of the Great Depression.

And he has been called one of the greatest stock pickers.

But at the time that he bought, he was buying indiscriminately, given how depressed the market was at that time.

From Wikipedia,

Templeton, during the Depression of the 1930s, bought 100 shares of each NYSE listed company which was then selling for less than $1 a share ($18 today) (104 companies, 34 in bankruptcy, in 1939), later making many times the money back when USA industry picked up as a result of World War II. According to Templeton, he called his broker the day World War II began and instructed him to purchase every stock trading at less than a dollar. This stratagem helped make him a wealthy man.

I am reminded of our own experience in the Great Recession of 2008-2009. It did not matter what stocks one bought then. You could make 2x your money or 5x to 10x your money, depending on which one you bought, but you would make lots of money.