"a permanently high plateau"
Irving Fisher used this phrase to describe the US stock market in October 1929 -- "a permanently high plateau".
His vision arrived 88 years too early, the permanently high plateau didn't arrive until 2017. Each year since 2017 has begun with stock prices at higher valuations than at the beginning of 1929. A person like me who studies economic history has begun each year since 2017 thinking, "This market is about to crash."
2018: "This market is about to crash."
2019: "This market is about to crash."
2020: "This market is about to crash."
2021: "This market is about to crash."
2022: "This market is about to crash."
2023: "This market is about to crash."
2024: "This market is about to crash."
I've been more wrong than Irving Fisher ever was. If I'd only believed in the market, my retirement savings would probably be over a million instead of over half a million.
The other night in the hot tub, B asked me why I don't sell stocks short in my play money account if I think they're overvalued. Well, I tried that a few years ago, and it was the only losing trade I'd made before my Russian stocks were confiscated after the invasion of Ukraine.
I've concluded that I cannot time the stock market. This doesn't mean I'm throwing in the towel and going all in. I continue to follow the formula I created based on historical valuations and returns, which keeps me only minimally invested in stocks. But I've given up on trying to sell stocks short to time the market.
Stock valuations also exceeded 1929's level from 1997-2002, then again in 2004, and 2007. Then from 2017 until the present.
What changed and allowed stock market bubbles to persist for so long and then recur so quickly? Why did stocks remain below 1929's level until 1997?
Some differences are the popularization of index funds and retirement accounts, and the expansion of the global middle class and human life expectancy. Way more people have way more savings to invest for way longer. So they've bid up stock & real estate prices while bidding down interest rates. We've also seen tax rates for wealthy people and corporations decline from their 20th Century wartime heights.
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Based on history, we still have a couple more months to go before my recession call fails. The first data on second quarter GDP will come out tomorrow.
His vision arrived 88 years too early, the permanently high plateau didn't arrive until 2017. Each year since 2017 has begun with stock prices at higher valuations than at the beginning of 1929. A person like me who studies economic history has begun each year since 2017 thinking, "This market is about to crash."
2018: "This market is about to crash."
2019: "This market is about to crash."
2020: "This market is about to crash."
2021: "This market is about to crash."
2022: "This market is about to crash."
2023: "This market is about to crash."
2024: "This market is about to crash."
I've been more wrong than Irving Fisher ever was. If I'd only believed in the market, my retirement savings would probably be over a million instead of over half a million.
The other night in the hot tub, B asked me why I don't sell stocks short in my play money account if I think they're overvalued. Well, I tried that a few years ago, and it was the only losing trade I'd made before my Russian stocks were confiscated after the invasion of Ukraine.
I've concluded that I cannot time the stock market. This doesn't mean I'm throwing in the towel and going all in. I continue to follow the formula I created based on historical valuations and returns, which keeps me only minimally invested in stocks. But I've given up on trying to sell stocks short to time the market.
Stock valuations also exceeded 1929's level from 1997-2002, then again in 2004, and 2007. Then from 2017 until the present.
What changed and allowed stock market bubbles to persist for so long and then recur so quickly? Why did stocks remain below 1929's level until 1997?
Some differences are the popularization of index funds and retirement accounts, and the expansion of the global middle class and human life expectancy. Way more people have way more savings to invest for way longer. So they've bid up stock & real estate prices while bidding down interest rates. We've also seen tax rates for wealthy people and corporations decline from their 20th Century wartime heights.
-----
Based on history, we still have a couple more months to go before my recession call fails. The first data on second quarter GDP will come out tomorrow.