Why I am optimistic about stocks

[IMATERP]

Bonds are never scary if you 1) do your research, 2) buy quality, and 3) hold to maturity.

+ 1

As Kenny used to say “you got to know when to hold em, know when to fold em, know when to walk away .....”. With Bonds you just buy (quality,) receive dividends, and wait for them to mature.

I

 

[marko]

Returns are all over the place but positive in 23 years and negative in 6 years. .

Which is why I like to look at a 3 year average vs year to year. Despite this year being down -5% my 3 year average is still +6.5%. IMO the market's trends are not always in sync with a Jan to Jan or 12 month timeline.

I viewed my 2017's 15% (and 16's 10.5%) as a 'false high' so here we are back to some sort of average against my 15 year 6.95% (which includes 2008-09)

 

[Dtail]

Bonds don’t bother me. After a tough year like 2018 they usually have a good year. In fact my bond funds have rebounded some over the past 2 months.

Stocks - well I’ve been a nervous nelly since CAPE10 approached and exceeded 30. Way high, higher than 2007, and only exceeded by late 90s levels.

It’s given back some with this recent selloff. Finally just now dropped below 28. The current 27.29 level still matches the 2007 peaks before the prior nasty bear, so still relatively high.....

Yeah that's an issue. Cape 10 was around 15 at the start of the bull market.
Going to 15 now would be a disaster.

 

[FIREarly]

The stock market is helpful. Try to remove as much fear as you can and invest in solid stocks. There are 2 AAA rated stocks. That is a great starting point. Real estate is another great way to diversify.

 

[Retired Expat]

What are your feelings about Real Estate as an alternate? Rental properties offer steady income and potential growth of principal. Plus tax benefits....

 

[Oakster]

Normally, I am long-term optimistic, but today I turned long-term pessimistic.

Normally, after a 10% to 20% drop so quickly, I get very optimistic. Now I see that GDP growth rates cannot be goosed so high anymore. So growth is slowing and fundamentally, stocks go up because of general economic growth. The slowdown is a long-term problem.

The short-term problems will get played out rather quickly. I think they are

1. FOMC will raise FFR tomorrow as expected.

2. Budget will get passed in some form and government will not be shutdown.

3. Trade war will take a little longer, but it will be attenuated.

4. Coal miners will die of black lung disease, so trying to keep coal mines open will become a non-issue.

5. Congress will do its job and help prevent some reckless decisions by others.

6. Brexit will not happen and another referendum will send Europe into a tizzy which is a positive.

So short-term looks excellent, but longer-term of 2 to 3 years out doesn't look good to me.

If your analysis of the market is not any better than your analysis of coal mines, I would hire a professional to manage your money, lol.

 

[Oakster]

3 of the 6 being the .com bust. So basically if you retired end of 1999, you were one unlucky sap...unless you had 3 years of living expenses liquid...then you bounced back in 2003!


Moral of the story, have three years of options when drawing down your folio.

That is one item that I want to try and figure out over the next decade before I get serious about considering retirement. How many years of liquid money do I need to have. I have read about people with 1 year all the way to people with 6 years, because no time in history has not recovered in 5 years. It seems to me that 3 years is about the right number to have in a CD ladder. Maybe that looks like 1 year in cash, and 3 years in a cd ladder for a total of 4?

 

[CyclingInvestor]

the bigger picture (1695-2010)

 

[mm9811]

One thing I try and remind myself of is the rolling 10 year returns of the stock market. It has only been negative twice. Once in the 30's after the crash and once ending in 2009.



Food for thought.

 

[RetireAge50]

Here is an updated graph. Just about 10% overall as expected. We have just about recovered from the 2008 crash.

 

[WyomingLife]

Normally, I am long-term optimistic, but today I turned long-term pessimistic.

The short-term problems will get played out rather quickly. I think they are ....

4. Coal miners will die of black lung disease, so trying to keep coal mines open will become a non-issue.
.....

Always revealing to see comments from a person who seemingly has no appreciation for hard-working folks. I’m guessing you worked at a desk most of your life, taking for granted where things come from —- things like electricity.

You also don’t understand energy. Most coal is mined from surface mines via high-tech, sophisticated operations. Coal miners are highly skilled — and mining operations are highly regulated (OSHA, MSHA, etc.). And coal is a commodity that is competing in the market.

Oh, and low-carbon mandates? Through efficiency improvements, enhanced cycling and the like, coal is working hard to compete.

When you turn off your lights tonight before you go to bed, thank one of those coal miners you are expecting to die, I guess. Coal is going through hard times, largely for economic reasons. Come to a coal community and tell the folks everything is going to be ok because their breadwinners are going to die; really?

I don’t understand people who seemingly have no empathy for their fellow human beings who are just trying to make a living in the world.

 

[smoghat]

Yeah, that was a callous and stupid comment about coal miners dying of black lung, even if this thread was old and moldy.

That said, it’s not coal miners who are dying, it’s coal mining that is dying out. Production is down by a third over the last ten years. In 1923, there were 863,000 coal miners in the US, by 2019, there were under 53,000 (roughly 1/10th the amount of bus drivers or taxidermists… two random professions I just googled). Plenty of states already generate minimal amounts of power by coal (NYS has 0% for example, NJ where I live has 2% and there are many other examples here). The battle for coal, which some people are inexplicably trying to fight, is a dead battle and it’s better to just spend the effort working on green energy, which is one of top three or four industries that will dominate the next 100 years. Whoever dominates it dominates the world, hence why China is pouring money into it.

 

[tizod]

The battleground is fusion. Much new money is into it (private as well!). With fusion you solve the energy problem...and have the worlds ultimate weapon(s).