I'd like to be optimistic, but in surfing, I found this (a blog by someone who is admittedly quite a bear):
Fred's Intelligent Bear Site - Inflation Adjusted DJIA
The major part of his argument against stocks is:
The long term chart of the stock market looks great. It shows a trend line that gains a healthy 5.1% per year. There is one problem. This is the wrong chart! The Dow is expressed in Dollars, and Dollars lose value over time. You must look at the inflation adjusted chart to expose the true nature of the Dow.
On the chart, the long term trend line in green shows an average return of
1.9% per year. If you factor in the long term 15% capital gains tax, the return is even worse. Since capital gains tax is not adjusted for inflation, the average tax must be based on the 5.4% trend of the non inflation adjusted chart, so 15% of 5.4% is 0.8% tax. Therefore, your 1.9% return is reduced to
1.1% after taxes. The Wall Street shills do not want you to know that this meager amount of capital gains is all you should logically expect from a long term general stock market investment.
The Dow has historically moved within well defined channel. The boundaries of the channel have been touched only 4 times since 1910. The top of the channel was last touched in 2000.
They say "the market always goes up in the long term," but at an average return of 1.9% per year, it can take many years to recover from a large decline. The peak in 1929 was not ultimately exceeded until 1992. When the market touched the bottom of the channel in 1982, its value was about equal to the value at the beginning of the chart in 1910.
Most bubbles eventually correct back to where they began. The bubble that began in 1922 gave back all its gains by 1933, and the bull market that started in 1949 gave back almost everything by 1982. The bubble that ended in 2000 could easily correct back to its 1988 level of 4000. If you are optimistic, you might decide that the bubble began in 1995, and the Dow will only correct back to 7500. If you are pessimistic, the Dow could eventually hit the bottom of the channel at about 4000.
Fred's Intelligent Bear Site - FIBS
His investment advice is:
Fred's Intelligent Bear Site - Financial Survival
Can anyone comment on this? The guy is making sense to me, even though he is quite the bearish contrarian. But it goes against everyone I've read and against most of what people on here think....