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> "S&P has never lost money over any 10 year period" Investing a dollar in 1929 meant 20 bad years. Sitting on that dollar for 3 years and investing it in 1932

> "S&P has never lost money over any 10 year period" Investing a dollar in 1929 meant 20 bad years. Sitting on that dollar for 3 years and investing it in 1932 meant no bad years. If I look at some expectations and common beliefs that people hold in 2016, I can't help but wonder whether we have one of those 20 bad year periods coming up. (By the way, part of the success of US assets is definitely related to American companies leading the way in business innovation like IT. But another part is related to the US running trade deficits and the dollar being the reserve currency, meaning large amounts of dollar liquidity flooded back into the US and mostly into its financial system.)

bryanlarsen 10y ago
Where "20 bad years" meant that your investment did not keep up with inflation, or barely kept up with inflation, but it still grew in dollar terms. In terms of bad things happening, that's fairly benign. It could be worse, and probably will be some time. I'm just not going to predict when.
- unknown_apostle 10y ago
  It meant "barely kept up with inflation" in the end. In those few instances: after 2 or 3 decades. During the intermediate years you would have spent a great many years looking at absolute carnage. Periodically getting trolled by bear market rallies. "Barely kept up" is therefore very theoretical, because few people have the character to wait it out that long. Many who call themselves long term buy-and-hold, will quietly change their designation after 10 years of watching blood stains drying up. That's exactly why, after such periods, markets are not just cheaply valued but almost literally "empty" and deserted. Btw, we haven't had one of those since the 60s/70s.
- loeg 10y ago
  And only because there was an exceptionally fast run-up in 1929. If you had bought in 1928 instead, for example, you weren't down nearly as much in 1930.
  - unknown_apostle 10y ago
    The chart from the article disagrees. Investing in the mid- to late 20s generally, a period of overvaluation, you would have done well initially. But for people who didn't have perfect timing to cash out (aka most shmuks like me), every buy-and-hold dollar invested in that timespan would remain deeply in the red for a very long period of time. Due to the severity of the actual 1929 crash, a brief moment of semi-good investment returns (measured over multiple timespans from a few years to decades) occurred in 1933-1935.

bryanlarsen 10y ago

Where "20 bad years" meant that your investment did not keep up with inflation, or barely kept up with inflation, but it still grew in dollar terms. In terms of bad things happening, that's fairly benign. It could be worse, and probably will be some time. I'm just not going to predict when.

unknown_apostle 10y ago
It meant "barely kept up with inflation" in the end. In those few instances: after 2 or 3 decades. During the intermediate years you would have spent a great many years looking at absolute carnage. Periodically getting trolled by bear market rallies. "Barely kept up" is therefore very theoretical, because few people have the character to wait it out that long. Many who call themselves long term buy-and-hold, will quietly change their designation after 10 years of watching blood stains drying up. That's exactly why, after such periods, markets are not just cheaply valued but almost literally "empty" and deserted. Btw, we haven't had one of those since the 60s/70s.
loeg 10y ago
And only because there was an exceptionally fast run-up in 1929. If you had bought in 1928 instead, for example, you weren't down nearly as much in 1930.
- unknown_apostle 10y ago
  The chart from the article disagrees. Investing in the mid- to late 20s generally, a period of overvaluation, you would have done well initially. But for people who didn't have perfect timing to cash out (aka most shmuks like me), every buy-and-hold dollar invested in that timespan would remain deeply in the red for a very long period of time. Due to the severity of the actual 1929 crash, a brief moment of semi-good investment returns (measured over multiple timespans from a few years to decades) occurred in 1933-1935.