VT your input & participation always articulates great learning points. I'm sure many on this side of the pond (IIRC your UK ), and particularly bh.org participants recall 08-09's huge >50% drop. It certainly woke me up having been 100% equites.Valuethinker wrote: ↑Tue Nov 27, 2018 4:22 amWe are taught to think in real return terms.willthrill81 wrote: ↑Mon Nov 26, 2018 11:20 pmThey were probably the worst investing years for almost everyone since 1973-1974.
That thinking was not common in 1973-74. What happened was you had quite negative returns e.g. on bank accounts *but* you still had your money (in nominal terms). Stock market plunged but 401ks in US were a new thing (I believe) and not many people had exposure to stocks - it was still a rich person's game.
UK had a horrendous stock market crash (70%+ in real terms). But there was also a housing crash - house prices didn't move for 2 years when retail prices rose by 40%. It was a "crash" but, by and large, people did not notice -- they had lost 40% of the value of their main asset in real terms, but life went on.
2008-09 the impact was directly on the portfolio - the real loss and the nominal loss were quite close.
What 2008-09 taught was the importance of having safe bonds in the portfolio - credit risk free fixed income instruments. The only thing that went up. That was basically the only form of diversification that worked. To top it off for most Americans their house fell by 20-50% in value?
I doubt people were really paying attention or that people who have come into the markets since then have absorbed that lesson. Each generation gets to relearn the hard-learned lessons of the previous.
I agree a worst investing return ever thread is certainly short sighted at the least, unless ones only considering market returns since March 2009.