Since sometime in the mid to late 1970's -- the Bretton Woods accord was abandoned in the very early 1970's -- inflation has been the most important driver of increases in both nominal earnings and nominal stock prices. That pattern should continue for the foreseeable future and possibly accelerate some in spite of occasional market dips, even severe ones as in 2008-9, which are quickly absorbed by a relentlessly rising market in the face of half-Keynesian economics. Half-Keynesian means that only half Keynes prescription is applied ,i.e., the half involving deficits and leveraging up by government in times of recession, but the other half is not implemented, i.e., the half involving during boom times either a decrease in government spending or an increase in taxation. Recognition of this is, of course, useless to the trader, but essential for the long-term investor. The long term investor should concern themselves with purchasing power rather than nominal dollars. In more recent years, when averaged over long periods, the total return of the S&P, once dividends are removed, is about 3-5% in inflation discounted dollars.
Indexes are formed up by companies that run on demand of their products and services. Products and services are consumed by people. Earlier these companies catered to the bulging population of United States. Now they cater to the whole world. Hundreds of thousands of babies are born every day compared to the people that die. Products and services would always be needed which means demand would only increase with the passage of time and with "compounding" effect of population.
enough said about his investment advice. you have made nothing in 5 years: return 5 Year 0.46% -0.11% Senior Investment Strategy Advisor Jeremy J. Siegel, WisdomTreeâs Senior Investment
I was wondering if Dr. Siegel could trade. I would love to see him sitting on a trading desk. I wonder how he would do. I mean he is a Wharton professor.
i am sure he would say just buy and hold good dividend stocks. the only problem with that is at one time the financials where good dividend stocks.
I want to see his emotions or lack of emotions while trading. I want to see how well he reads the market IN REAL TIME. Buy and hold is investing.