Saturday, March 7, 2009

lol at the Stock Market

Buy-and-hold is for slow people. I've been saying this forever and stopped using buy-and-hold as a strategy. I've said this at the meetings only to be confronted with non-sense about average returns from indexes. Yeah, how's that average return treating the suckers who wanted to retire within the next 3-5 years? These people will have no retirement and won't even be able to get jobs as Wal-Mart greeters. They all would have been better off if they hadn't listened to fraudulent sales agents known as "financial advisors."

Buy-and-hold worked when we had reasonable expectation that there was an underlying drift in asset prices. Diversification made sense, and minimum-variance portfolios designed to capture profits and minimize risk seemed like good ideas. What the stock market is telling us is that the "real" growth justifying the upward drift in our country is over. The press today was fawning over Wal-mart's sales increase, but clearly the Wal-mart shift is a sign of the consumer making trade-offs for inferior goods. Technology saved us for the last 20-30 years, but I doubt we will be so lucky this time around.

We will not recover quickly this time. My prediction: we hit 5500, flat line for a while, then hit 3500 or so. We won't recover for 10 years. After 10 years, the demographic shifts will be so dramatic and so heavily weighted in favor of the poor. The US will be gutted and its population will be enslaved in a form of neo-feudalism.

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