Samex Capital's Stock Market CROSSCURRENTS Alan M. Newman, Editor to coincide with receipt by snail-mail subscribers. It just blows us away how misinformation runs rampant from the mouths of so-called professionals. For instance, take the comments of Michael Tanner of the Cato Institute, who recently told CNBC's Mark Haines and millions of viewers that ".... there's never been a 20 year period in U.S. history in which people would have lost money [in the stock market]." WRONG! Mr. Tanner is pushing his own agenda for social security reform and unfortunately, his approach, which "is based on individual responsibility," really doesn't say much for the security retired folks need. Remember, these are the very same individuals that were responsible for participating in the greatest mass hysteria stock market mania of all time just a few years ago! By claiming the long term is the sure fire cure all, Mr. Cato can only do great harm to investors. Check out the botom chart from our August 2004 update of Pictures of a Stock Market Mania, showing just how often 20-year holding periods can be underwater. Since 1917, all rolling twenty year periods have been in the red 5.6% of the time, not very much, but nevertheless, in the red, contrary to Tanner's claims. As well, if you raise the stakes to a paltry 2% return, stocks have still been below the mark 20.4% of the time. And just for kicks, we’ll be happy to tell you that those who were holding stocks for 30 full years on September 9, 1950, were also in the red. Stocks were never meant to buy and hold forever or even for a lifetime or close to it. Shares in individual companies should be bought when they are cheap and sold when they are expensive. There is no other way to invest. Anything else is sheer madness and is worthy of our contempt. Rant over. Ken Fisher is bullish (see Forbes magazine, November 29th). Okay, tell us something we don't know. In case you aren't aware, Mr. Fisher runs a money management firm, the kind that fishes for investors, sends us unsolicited mail way too often, boasting performance and most of all, bullish dreams that are fun to bank on - if only they could always be true. At least half the time they are, and that is why the stock market is everyone's favorite dream vehicle for wealth. Trouble is, at the tail end of the greatest bull market of all time would logically follow one of the most severe and protracted bear markets of all time, so pardon us for our skepticism. Not to be dissuaded by valuations exceeding those at the 1929 peak, Mr. Fisher is nevertheless "looking for a melt-up." Part of the rationale for this unbridled optimism is supposedly that the first year of the Presidential cycle has been wrongly quoted as an under performer. Fisher goes back to 1929 to show 19 "first" years averaging 7.5%, 10 of which were negative, but then points to the nine "first" years that showed huge 28.4% average gains. Fisher thinks, "next year will fall into the gain column and that it will fit the pattern by being big--up 30% or more." Well, we intend to keep a tally for his readers and clients. The post WW II record is probably a bit more germane and shows average gains of only 3.7%, certainly nothing to write home about, especially when dividend yields are nearly invisible as they are now. It's also somewhat disingenuous for Fisher to ignore that the outsized gains in 1985, 1989, 1993 and 1997 occurred within the greatest bull market of all time. If the next four cycles mirror those of 1965, 1969, 1973 and 1977 achieved in the last secular bear market, we are instead gazing at the torture of average annual LOSSES of 9.6%. Sigh. It's sooooo easy for the cunning to paint a bullish picture. What's really difficult is to muster the courage to tell folks the things they really may not wish to hear but need to know. ENROLL IN OUR FREE TRIAL IF YOU HAVE NOT ALREADY DONE SO BEFORE. WATCH FOR OUR NEXT REPORT IN TWO WEEKS ON DECEMBER 22nd. ABOUT ALAN M. NEWMAN Alan M. Newman has been the Editor of CROSSCURRENTS since the first issue was published in May of 1990. Mr. Newman is also a member of the Market Technician's Association and has been widely quoted for years by the financial press, media, and other newsletters and has written articles for BARRON'S. The newsletter is published about 20 times per year and focuses on economic and stock market commentary, often covering controversial subjects. Several proprietary technical indicators are usually featured in every issue accompanied by current interpretation. Broad samples of our work can be viewed at http://www.cross-currents.net/. Subscription rates are $169 for one year (20 issues) and $89 for six months (10 issues). A FREE 3 issue trial subscription is available by emailing us (click the "free trial" link above). Please note: trial requests must include name, address and phone number and must originate from the email address the trial is to be delivered. Trials are only available by Email (.pdf files). U.S. Mail subscriptions are available but include a nominal surcharge for postage and handling. |
Longboat Global Advisors CrossCurrents 12/9/04
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TTHQ Staff
, Dec 09 2004 09:19 AM
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Posted 09 December 2004 - 09:19 AM