Thank God 9/9/11, and the next few days proved safe. I still have a weird feeling, though, especially after the attacks in Afghanistan over the last few days.
Anyway, to the title...let's gain some perspective on our place in history.
The S & P 500 closed at 1106.40 on 9/6/2001.
Today, 9/13/2011, it closed at 1172.87.
Wow...it took 10 yrs to gain 67 points...approximately .6%/yr, less than 1% a year.
If I adjusted for inflation, the results would be pathetic. In fact, they would show a loss.
Let's take it back 20 yrs...
In 1991, the S & P was trading around 300 (yes...300). If you bought an index fund in 1991, and held it until now, you made approx. 391% over 21 years, or 19.55% per year. Of course, the number would be less if we adjust for inflation. But, spectacular, nonetheless.
This explains why the baby boomer generation has so much faith in the stock market. Gains are almost all they have known. They were in their 40's...their prime earning years, when the boom began... and there were lots of them. They didn't start seriously investing until about 1988, and over the next 20 years, they made money, for simply handing their money over to a smooth talking, chart producing broker with black hair and white teeth. (perhaps a nice suit)
They attributed this gain in wealth to their "smarts". In truth, most of them had no idea why the value of their investments was going up, they just took credit for it. We all want to believe we make the wave move, in truth we are just riders...riders on the storm.
This tells us what?
Everything reverts to the mean. We have just experienced a 20-25 yr bull cycle, driven by debt, population, central banks, demographics, and speculation.
It is over. We are sitting at the far right side of the right shoulder of the largest head and shoulders top in known history. (graph above)
The cyclical bull market is over.
It will take a while (perhaps 2-3yrs), but the DOW is headed toward 4,000. Raise cash so you can take advantage.
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