A time to EVALUATE your jitters

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Lancelot
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Re: A time to EVALUATE your jitters

Post by Lancelot » Fri Aug 11, 2017 7:35 pm

Jeff Albertson wrote:from the Economist's Buttonwood:
Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School are the acknowledged experts on global investment returns, having compiled data covering 22 countries over more than a century. As of February 2013, the longest period of negative real returns from US equities was 16 years. But it was 19 years for global equities (and 37 for world ex-US), 22 for Britain, 51 for Japan, 55 for Germany and 66 for France. Such periods are much longer than most small investors would have the patience to wait.
http://www.economist.com/blogs/buttonwo ... /investing
Thanks so much for posting this!

I've pretty much stopped debating with friends about the merits of having a bond/cash cushion to soften a significant market pull back. They usually quote "Average S&P returns since 1926 are 10%; Aren't you enjoying this rally? and I'd rather be an owner than a lender" (Bond reference) I have the majority of my portfolio in equities but I've never forgotten the quote from William J. O'Neal, IBD, "All stocks are bad." :sharebeer :sharebeer

I think many of us have -mostly- enjoyed fantastic equity returns since the 1980s and see this as a given.

Maybe its true, but then maybe its not :D

For me the example of France is especially sobering.
No Where for Very Long...

John1960
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Re: A time to EVALUATE your jitters

Post by John1960 » Sat Aug 12, 2017 3:59 am

This is an excellent post. Risk tolerance is a very interesting issue. In the long bull markets, investors think they have high risk tolerance. I remember bear markets. In bear markets all of a sudden people's risk tolerance quickly changes.

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LadyGeek
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Re: A time to EVALUATE your jitters

Post by LadyGeek » Sat Aug 12, 2017 6:03 am

The wiki has some background info: Risk tolerance
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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nedsaid
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Re: A time to EVALUATE your jitters

Post by nedsaid » Sat Aug 12, 2017 10:26 am

John1960 wrote:
Sat Aug 12, 2017 3:59 am
This is an excellent post. Risk tolerance is a very interesting issue. In the long bull markets, investors think they have high risk tolerance. I remember bear markets. In bear markets all of a sudden people's risk tolerance quickly changes.
I agree 100%. I am amazed that people who ought to know better, and people who ought to remember the 2000-2002 and the 2008-2009 bear markets, are amazingly aggressive with their asset allocation. It goes to show that memories are short and the recency bias does exist.
A fool and his money are good for business.

slipp1229
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Re: A time to EVALUATE your jitters

Post by slipp1229 » Tue Aug 15, 2017 10:32 am

Great post...

nervousnovice
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Re: A time to EVALUATE your jitters

Post by nervousnovice » Wed Aug 16, 2017 10:16 am

This is an excellent thread! I have a question and apologies if it is answered elsewhere. If we have invested in bonds and mostly US treasury bonds to reduce risks, what is the effect if the congress does not raise the debt ceiling? Does that automatically mean the US defaults on its debt and does that affect bonds? Thank you in advance for any insight!

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