Wednesday, March 04, 2009
The bull case
The video embedded in this post at Infectious Greed articulates the bull case fairly well, and is something of an antitode to those who argue that we are headed toward depression.
If you are not a professional money manager who lives for the quarter, it may well be a good time to buy stocks. No, the market has probably not hit bottom (notwithstanding my prediction). That is not, however, the correct framing of the issue for the individual, who should instead ask whether stocks are likely to be materially higher at some point in the future before he needs the cash that he has available to invest in stocks today. If you'll need money this year or next, do not put it in stocks. If you will not need it for five or ten years, this may be the buying opportunity of a generation.
I learned a lot about the stock market from my grandfather, who was born in 1900 and graduated from the second class at the Harvard Business School. He and my grandmother owned stocks in 1929 and suffered the crushing "paper" losses in the years thereafter. Nevertheless, my grandfather was fortunate to have kept his job (although he ate two pay cuts of 10%), and they never lost their faith in America's future even when the political culture around them had thrown in the towel and America's capital had gone on strike. My grandparents kept buying, and in the years after World War II were handsomely rewarded for their optimism. So, do you believe in America? Your answer, which is essentially religious in nature, will inevitably inform your investment strategy.
1 Comments:
By 
, at
Thu Mar 05, 12:33:00 PM:
It may be that stocks may yet get materially lower before they get materially higher. Less than a month ago, I thought that the DJIA might get as low as 7,000 by April. Well, that turned out to be a very optimistic guess.
