More dots for perspective

by | Nov 21, 2002 | Archives

May I draw your attention to several graphs and messages we have viewed in recent messages. Each of these thoughts is vital, but drawn together they show a bigger picture still.

The first chart looks at the past 100 years of Wall Street's performance and suggests that the stock market is in a 15 year down trend. See our message for more on this.

Based on the implications in this chart we should not expect a real bull market to begin again until about 2012.

The second chart shows how this downtrend may unfold with a series of 19 month to 32-month mini bulls followed by a sudden and severe drop. In other words U.S. equities will experience dangerous sideways movements for the next decade or so. For more on this go to

This chart suggests that now is the time to be back into equities.

A look at the economic cycle also suggests that during the bottom of a recession is a good time to add the equity weighting in your portfolio.)

So this appears to be a good time to invest in equities.

However, another chart recently shared shows that market timing is very dangerous. All of the growth (above treasury bond rates in the Dow) took place in just 30 months during a period of 70 years. For more on this go to

The fourth chart shows how important time is to compound interest-bearing investments. For more on this go to

The fifth dot is knowing the fact that though history does repeat itself, it never repeats itself in exactly the same way.

Connect these dots and we can see several truths.

#1: To increase our capital in the stock market over the next decade involves considerable risk.

#2: To increase our capital through interest bearing investments in just the next decade with current record low yields will be almost impossible. We do not have the time or the interest rates.

#3: No one can predict exactly what will happen.

This leads us to one important conclusion. If we are young and have time, interest-bearing investments may be better than shares. If we are young and have time and are going to invest in shares, do so for the long term and use three-phase investing. For more on this go to

If we are older, we need more to increase our wealth. Having our own business is one good way as is explain at Intelligent leverage is also another good way to get higher returns now. We'll look at one way to achieve both of these in next Thursday's message.

Until next message may your business be good.