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All but predicting a "permanent prosperity" makes you sound like pundits just prior to the 1929 market crash. Historically, booms and busts are what the market
by Aloha 10y ago
All but predicting a "permanent prosperity" makes you sound like pundits just prior to the 1929 market crash.
Historically, booms and busts are what the market does, go back over the last 150 years, since the end of the American Civil War - you'll see a boom, following by a bust - the Federal Reserve and the changes enacted in the aftermath of the depression has dampened it a fair bit, but it still happens - and could happen just like it did before.
Our financial system is very very fragile, and like a chain stitch, one loose thread in the wrong place, and the whole thing could unwind - thats the problem. So Remember in the end, a wave of bank failures are what made the depression last a decade, not just the recession itself.
- pembrook 10y agoI never said "permanent prosperity" anywhere in my comment. Of course the market has boom and bust cycles. Will the market pull back sometime in the near future? Probably. However, it just doesn't matter for anybody with an investment horizon over 10 years. The gravity of the markets is upward. Timing the broad market consistently is statistically impossible. The subprime mortgage crisis was statistically a once in a lifetime drop, only comparable to 1929. It's occurance was due to a fundamental flaw in the system. It wasn't part of the standard "pattern of the market." Everybody sitting on the sidelines waiting for the next flaw to rear its head will likely decompose before that happens. The size of your future returns directly correlates to the amount of risk you are taking. If you are on the sidelines it's a statistical certainty you'll get destroyed by inflation.