> In a few years, this movement of baby boomer money into safe havens
should drive down both the price of stocks and the yield on bonds.
> ~Alypius Skinner
No, for two reasons:
1) Many who retire will not sell all their stocks.
If they get an annuity, the stocks are just transferred to the insura
--- Bryan D Caplan <[EMAIL PROTECTED]> wrote:
> (Incidentally, 7% sounds low relative to other averages I've heard.
> Burton Malkiel cites a figure of 10% real pre-tax if I recall
> correctly).
Roger Clarke and Meir Statman, Winter 2000, "The DJIA Crossed 652,230",
Journal of Portfolio Management
Alypius Skinner wrote:
> The 7% long-term inflation-adjusted return on equity investments (composed
> of dividends plus capital gains) is only true for people who enter the
> market at very low P/E's and benefit from dramatic P/E "inflation."
How can that be? That 7% is an average over all owner
In a message dated 1/8/03 7:10:56 AM, [EMAIL PROTECTED] writes:
<< True, but people don't live 300 years! People who make their fortunes in a
bull market and then get decimated in a bear market may not recover in their
lifetimes. It has happened before.
~Alypius Skinner >>
yes, and that ma
>
> Compared to the factor of 25 by which real per capita incomes have grown
> since the Industrial Revolution, there ARE no large bubbles.
>
> David Levenstam
True, but people don't live 300 years! People who make their fortunes in a
bull market and then get decimated in a bear market may not r
> People retiring today can expect to live another 20 years or so. So
> even there it's not clear that heavy equity investment isn't the smart
> choice. As far as I understand the literature on the equity premium
> puzzle, this explanation doesn't really work.
Yes, it does. If you're drawing d
Alypius Skinner wrote:
> People aren't always alive in the long-term! Lots of baby boomers are
> approaching retirement when they will begin to draw down their savings. If
> their savings are being decimated by a bear market at the same time, they
> may not have enough to last them until they die
In a message dated 1/7/03 11:58:51 AM, [EMAIL PROTECTED] writes:
<< > If one had a cynical bent one might suggest that the predominance of
> stories about the small bubbles in the huge cake batter of the miracle of
modern economic growth stems from a prevalence of statists in the news
media.<
> D
The average
> investor would be far better off if they did think that enormous returns
> could continue forever because, in a deep though less dramatic way, they
> DO. I suspect that a lot of people have been turned off to stock
> ownership for decades in spite of the fact that they are the smart
--- Bryan D Caplan <[EMAIL PROTECTED]> wrote:
> I find it interesting that there are so many more articles about bubbles
> than about the underlying reality of the equity premium puzzle. This is
> a nice case where a little knowledge is a dangerous thing. The average
> investor would be far bette
> If one had a cynical bent one might suggest that the predominance of
> stories about the small bubbles in the huge cake batter of the miracle of
modern economic growth stems from a prevalence of statists in the news
media.<
> David Levenstam
What about the large bubbles?
Fred Foldvary
=
[
In a message dated 1/7/03 12:53:47 AM, [EMAIL PROTECTED] writes:
<< I find it interesting that there are so many more articles about bubbles
than about the underlying reality of the equity premium puzzle. This is
a nice case where a little knowledge is a dangerous thing. The average
investor wo
I find it interesting that there are so many more articles about bubbles
than about the underlying reality of the equity premium puzzle. This is
a nice case where a little knowledge is a dangerous thing. The average
investor would be far better off if they did think that enormous returns
could co
In a message dated 1/5/03 6:56:36 PM, [EMAIL PROTECTED] writes:
<< Take the crash of 1929. In Devil Take the Hindmost, Edward
Chancellor records how Wall Street's elite convinced themselves that
the rules of economics had been rewritten and that the market could
support ever-highe
http://www.mail-archive.com/futurework@dijkstra.uwaterloo.ca/msg05751.html
http://www.ardemgaz.com/tech/D4bcrashes6.html
History shows paths to market crashes, but lessons seem
forgotten LARRY ELLIOTT THE GUARDIAN,
LONDON In the spring of 1720, when all of London was clamoring
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