I want to comment on the chart I posted above. For most of us, our entire investing lives have been spent with the idea that data from prior to WW2 is probably not very meaningful, because of institutional changes, smarter investors ( this was asserted by James K Glassman from the Washington Post who wrote Dow 36,000.) Ithink Jermey Siegal also promoted this idea. "Investors have finally igured out that the equity risk premium should be zero", blah, blah.
In light of this, I find it interesting that our current bear is the deepest fall from any peak since WW2. The other deep falls were during the long bear in the first 2 decades of the 20th century. And of course, El Oso Mayor 1929-1932.
By some other metrics since as smoothed PEs, those bottoms were much cheaper than today. And the bottoms in 1982 and 1974 although coming after a less steep fall, took valuations as measured by smoothed PEs lower than today's. It always looks hard when confronting it as a future; and incredibly obvious when looked at from the other side
It is like it always is, maybe the market will turn up soon, or maybe this is going to test those old levels which no longer seem so antique.
The only really simple way to invest is to use a conservative and appropriate AA, and let 'er ride.
Since this relentless crash, we tend to come up with all kinds of ad hoc prescriptions that appear as if they would have helped us avoid this mess. And they would have, had we been been able to know in advance just how this mess would unfold
An idea has become popular on the board lately that had we not been so dumb we would have pulled out last fall. Maybe, but it wohuldn't have been due to anything other than a hunch. Values last fall were pretty similar to values during the huge bull market of the 90s that enabled many of us to ER in the first place.
Suddenly Prof. Shiller is a hero, but all during early and middle parts of this decade any mention of Shiller attracted the obvious retort- "He would have got you out in 1996, and you would have missed the whole super bull market."
How many of us would be retired if we had rolled over our CDs year to year? (ignoring recients of early pensions.)
Ha