Wednesday, March 11, 2009

Death of the American Dream? (nah)

From Vanity Fair:

Jonah Hill, Seth Rogen, Jason Segel and Paul Rudd on the April 2009 cover of Vanity Fair

HT: Infectious Greed
With an oposing point of view, ELO:

And coming up the middle, your little ray of sunshine with a reprise of an October '08 post:

The Mathematics of Losing Money
...There are two bright spots though. After the current cyclical bear market decline has ended we get the secular bear market valuation contraction (i.e. broadly sideways as earnings growth doesn't goose prices), approximately eight years worth .

That's not the bright spot.

Following that, we can look forward to a 15-20 year secular bull market starting somewhere between 2015 and 2020. But, there will be opportunities all along the way.

Shorter term, the other bright spot is that returns coming out of these generational bottoms are some of the best the markets offer:

Best U.S. Stock Returns Born Out of Troubled Times
Three Best Periods to Enter the U.S. Stock Market Since 1926:

●Since 1926, the best five-year return in the U.S. stock
market began in May 1932—in the midst of the Great
Depression—when stocks rallied 367%.

●The next best five-year period (when the stock market
rose 267%) began in July 1982 amid an economy in the
midst of one of the worst recessions in the post-war
period, featuring double-digit levels of unemployment
and interest rates.

Number three, following the Most Dramatic Fed Tightening in Past 20 Years

Dec 1994 251%

Source: Fidelity
U.S. stock market returns represented by total return of S&P 500® Index.
Three dates determined by best five-year market return subsequent to the month shown.
Sources: Ibbotson, FMRCo (MARE) as of August 31, 2008.

So where's the bottom? Who knows.