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The Real 'Roller-Coaster' Of Investing In Stocks
We have discussed the apples-to-unicorns comparisons of returns between stocks and treasuries in the past making the critical points that a) risky corporate equity returns should be compared to risk corporate equity yields/spreads (as opposed to Treasuries), and b) they must be adjusted for risk. However, as we also pointed out, and in no way suggesting one is better than the other, there is one other major real risk that is so often overlooked it is remarkable. That risk is 'drawdown'. As the following chart summarizes over the past 33 years, it's been quite a roller-coaster ride for those anchoring-biased human beings looking at their account statements. More interestingly, it is exactly this drawdown of recent days in bond markets that is supposedly setting off the great rotation - even though the order of magnitude relative to stocks is dramatically lower.
and coincidentally, dshort.com published this chart for a longer-term view of rolling returns...
with this warning...
As these charts illustrate, and as many households have discovered during the 21st century so far, investing in equities carries substantial risk. Households approaching retirement should understand this risk and make rational decisions about diversification. In the past I've suggested that they should also consider fixed income alternatives for that part of the nest egg that will pay non-discretionary expenses not covered by Social Security and pensions. Unfortunately this traditional wisdom has been less helpful in recent years owing to the Fed Zero Interest Rate Policy (ZIRP) and various stimulus strategies, which have collectively shrunk interest rates.
Charts: JPMorgan and Doug Short
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Bonds are great right up until the bond investor gets "GM'ed".
Get ready for the roller coaster ride.
16:30 AUD AIG Services Index 41.5 40.6
18:00 AUD HIA New Home Sales (MoM) 3.9%
18:00 CNY Chinese Non-Manufacturing PMI 54.30
18:30 AUD Retail Sales (MoM) 0.3% 0.2%
18:30 AUD Trade Balance -0.05B 0.03B
18:45 CNY Chinese HSBC Services PMI 51.2
19:55 AUD RBA Governor Stevens Speaks
T-minus 19 minutes
Jane's Addiction - Been caught stealing
http://www.youtube.com/watch?v=TNH57uvOcU8 (3:33)
You'll have none of these problems if they allow the bitcoin etf.
Yes, but you'll still have a Bitcoin ETF.....aka, MOAR PAPER! In case it's escaped anyone's attention....the world is literally drowning in paper.
Central bank printing, DotGov forms, mail, junk mail, so-called 'newspapers', and greeting cards.....we've got enough already.
I'm going to start "The Cow Jumped Over the Moon" ETF. It will track the greatest fairy tale stocks like Tesla, Chipotle, Netflix, Amazon, and the new darling Noodles and Company. Only stocks with a P/E requiring every human on Earth plus a few space aliens to buy a product to justify their valuations will be allowed.
It will be called the greatest growth story of all time. All that is required for investors is the belief in fantasy. Because it's fantasy, the stocks can never go down. Anything that can be dreamed is possible. Turing $100 into $1 million in one quarter, entirely possible. The talking heads on TV all believe.
The best part is everyone can get rich as long as they give me all their money.
I want in!
I'll buy 10K shares (I don't care what the share price is, just get me in ahead of the herd!).
I call these BOTH roller-coasters.
http://www.showrealhist.com/RHandRD.html
AND I call keeping BOTH out of sight "The public be suckered."
the side effects of capitalism
I believe this article is directed to those still playing the Ponzi and bitching about its unfairness to the little guy.
Great charts, which by the way make the S&P500 look like a good bet, especially now with rising intra-year declines.