Wednesday, October 28, 2009

Secular Bear Markets

My dad was fond of quoting George Bernard Shaw, 'youth is wasted on the young'. Citing the obvious was sometimes his forte, but doing so with an experienced eye was his talent.

When it comes to investing, youth is not always an asset. How many of today's investors remember the oil embargo of 1974-1975? Or, Black Monday from October 19, 1987? Having some perspective to draw from is a wonderful resource.

The secular bear market we are now experiencing started in March of 2000. It's now 9 years old and going strong. It's nothing new. But, it is frustrating though. At some point, we will eclipse the 12,000-14,000 level on the Dow Jones Industrial Average (DJIA) from 2007.

Older investors may recall the 1966-1982 period of time. The Dow struggled to get over 1,000 and required 16 years to do so. We may be in a similar situation.

This is not to say there are not investment opportunities along the way. Plenty as a matter of fact. During the 16 years from 1965-1982, there were 6 up and 7 down cycles ranging from +75% bull rallies and -45% bear raids. The difficult part of course is to gage when one starts and ends.

It should be noted: Commodities were the best performing asset class from 1970-1979 and gold increased +1,600%.

Time seems to heal all wounds and one day we will surpass 14,000 on the Dow.

1 comment:

Anonymous said...

Good job....