There's a great quote about the financial markets (by Keynes, I believe) that goes like this: "The market can remain irrational longer than you can remain solvent." And damn if they aren't testing me.
I've been convinced for over a year that the correction we saw in the markets from March 2000 to October 2002 is only the tip of the iceberg. Not only do the markets still need to get cut in half in order to get near reasonable values, but there are lots of reasons to expect that they won't be any higher 5-10 years from now than they are today.
I've been making that assertion for the last 10 months, and people will point out that the markets are, in fact, higher. But my point is not focused on time scales less than a year. My point is that buy-and-hold investing will (probably - nothing is ever certain) "disappoint" investors by making their money do nothing productive for a decade. There was a period in the 1960s and 70s where the markets went up and down and up and down, and then at the end of the period, the markets were exactly where they'd started. Buy-and-hold investors would have gone nowhere with their money in almost a decade.
I'll be writing much more about this topic, but right now, it's Xmas Eve and my mind is mostly not on topic.
Posted by Tom Nugent at December 24, 2003 09:12 AM