Total Pageviews

Follow by Email

Tuesday, August 17, 2010

Bullshit And Bearshit Are Still Just Shit!!


As many of you know, I have previously written about the Japanese experience in both their stock market and housing market. When the Nikkei was first electronically listed for international trading on January 4th 1984, it was at 9927. Today it is 9162. So if you had just had an index fund that tracked it, you would have lost around 7.3%. Nice return for 26 years! The high of this index was 38916 in December of 1989. Similarly, the Japanese housing market took 9 years peak to trough, but it fell approximately 80 percent before slowly starting back up. Japan still remains a somewhat deflationary economy. Now in July 1998 the Dow was at 9259. Based on today's close, an index fund here would have returned 11.3%. Now, a return of less than one percent a year surely would not have kept up with inflation. Now it appears that a double dip recession is certainly possible, as well as long term weak economic growth and long term deflation. The Dow started the year at 10430, and today looks to close right around that mark. So, if you were an indexer, you have lost another 8 months or so. If you like the S&P better, the year started at 1116 and should close today at 1094. Small loss for the year. Now it remains virtually impossible to imagine any economic news in the next few years that will do much for these markets. Could we go 26 years like the Japanese without any real return? We keep saying that we won't make the same mistakes that Japan has made, but weather we are making the same mistakes or new ones, doesn't look like we are doing any better. So, all I can see to do, is remain careful and do small trades within a bouncing range of the 50 day and 200 day moving averages, or rotating in and out of sectors that seem to be happening weekly. Just don't see any way that buy and hold has any chance of working for the remainder of my possible investment life......

1 comment:

TerribleTerry said...

Watch the price of oil. Over $85 and the wheels fall off the economy. Under $85 and we sputter a bit and start to look lively. Not much cheap, easy to get oil out there anymore.......