There is a difference between what a given stock or a portfolio of stocks might do over the long term and what the market might do over the long term. Over the long term, the market will be higher, if for no other reason than losers are expunged (you think the market would be where it is if every company that had ever been listed were still being carried?). Stocks, however, along with the companies they represent, disappear all the time. Your friend may be absolutely on the mark. But it's more likely that he has a case of 99itis.
Great! I will start buying a representative porfolio of Dow stocks, versus the diamonds because I want the dividends too, and continue buying. Every month just like a mutual fund. Dollar-cost-averaging! And it six-seven years I should have more than tripled the money. Not bad.... I'm in, and long!
But lets not overlook the pain one may have to endure....thats key....over the long term ( 42 years ) one may say that the dow could be up over 1000% who knows, but how much would u let ur investment dwindle down to before cracking??? peace
And if Mr. Lips a private Swiss banker is right the middle class is being destroyed : http://www.fromthewilderness.com/free/ww3/gold_wars.html "The actual monetary order is a fraud. It punishes the workers and the pensioners. It is destroying the middle class. Now inflation is not the biggest problem but rather it is deflation. To avoid both, the world must return to a gold standard. The gold standard is the only "honest money." It can restart the world economy at the maximum of its potential guaranteeing the savings and increasing the level of investment. Furthermore, during times of a gold standard, historically there are fewer wars." Not accounting how people's money will continue to be pumped by stock market and other means : http://www.fromthewilderness.com/free/ww3/080803_where_money.html "Where Is The Money? A New Interactive Web Site Hits You in the Face Over the Enron-Style Looting of the US Treasury and What It Means to You Personally"
Good point raised so far - one individual's basket of stockholdings does not equate to the market. I'm not sure if it's 100% sure that the overall US stockmarket will be higher in 42 years' time, although I would think that it is more likely it will be higher than lower. Also is this on a nominal return or real return basis? Although stocks traced sideways for a mere 16 years from 1966 to 1982, it would have taken longer than 16 years to get one's money back on an inflation-adjusted basis. Also there is the myopia of investing one's entire stock allocation to US stocks. A less risky approach would involve investing a portion in stocks of different countries, and hedging the currency risk. (Or deciding not to hedge, if you believe as I do that the US Dollar has seen its best days). A multi-country stock allocation makes sense, if one looks at the potential for negative returns over a 42 year period. For example, the Japanese stockmarket may not reach new highs until after 2032, which is 42 years after 1990. Now I can hear you say that "that won't happen here, this is the US", however that argument doesn't stand too well, there needs to be a more detailed reasoning to justify throwing all of one's stock allocation eggs into the basket marked "USA".
You might also ponder how GDP has risen from $238 billion in 1947 to the latest $10777 billion, a growth rate of about 7% close to what the stock market has done. It is economic growth. You may be thinking that the stock market is or is similiar to a zero sum game, it is not. It is a positive sum game where the participants as a whole are able to take out more than they put in. Unless we get hit with deflation, then the reverse will happen. DS
I don't agree in details. I agree that at term the market should crash like 1929 (both for technical and above all fundamental reason and fundamental is THE LAW for long term) but before there can still be a new record and I have already given the potential of my model: <FONT COLOR=GREEN>16000 on Dow Jones in 8 years</FONT>. Since in my model time can be compressed or expanded to half this mean that it could be done roughly in 4 to 12 years (this compression/expansion "explains" volatility - see also Mandelbrott articles in Scientific America untitled "Multifractals walk down Wall Street"). So <FONT COLOR=RED>after 2012/2013</FONT> the real threat could begin. So for years coming, and contrary to many elliotists today, I am rather optimistic for Dow Jones but it is an illusion in fact this rallye will exhaust the last liquidity and accelerate credit flood that is why in reality this is a very bad thing for the economy and the retirement of the baby boomers who will see their pension evaporate in this blowing top.