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1802-2009 performance of equities, gold, bonds, cash. Stocks win big.



October 24, 2009 – Comments (35)

Dreman's book "Contrarian Investment Strategies:  The Next Generation", published in 1998 has a section that quotes Jeremy Siegels "stocks for the long run".

It discusses the inflation-adjusted returns of stocks, gold, bonds, t-bills, and more over a very long period of 1802-1996.  

GOLD:  the data presented shows that Gold is a good wealth-preservation mechanism.  Essentially gold has zero return.   Over the entire 194 year periodthe movement of gold was marked by very few events.  For 100 years from the early 1800s to the early 1900s it hardly moved at all.  

However, gold was marked by a large bubble peaking around 1980 (as you all konw) which then slowly deflated over the next 15 years or so until gold had reached the "broken even" point, once again reaching a zero return.  The graph ends in 1995 with $1 of gold invested in 1802 worth apparently, again, $1 in inflationa djusted dollars.  Gold prices adjusted for inflation bottomed around 2000-2001, so gold fell below the long term trendline, meaning that it was "cheap".

Gold today appears to be above the long term trend line once again, and fairly significantly.  I would guess that gold bought or held from here is not likely to be a good very long term hold.  You are essentially at this point, from this fairly simple analysis, betting that a gold bubble forms.  

However, gold may once again fall significantly below the long term trend of zero return (adjusted for inflation), and if it does it may well (as it did in 2000/2001) represent a good buy.  And a bubble may form in gold from here, but it does appear that gold is a speculative play at this point unless someone has reason to believe that a 200 year trend of basically zero inflation adjusted return is going to break down permanently.


COMMODITIES:  presumably... and i'm just guessing here... commodities, adjusted for inflation have a return of supply and demand.  If demand for one commodity grows faster than supply, presumably its price goes up.  Oil held a long term inflation adjusted price that was essentially constant from the end of WW2 to 1974.  It spiked up dramatically in the 70's only to largely return to the long term trend in the 80's and 90's and dip below it in 1998.  Beginning at the turn of the 21st century oil moved dramatically up. 

Etc, etc, etc.  Commodity investing appears to be betting on price fluctuations or long term supply and demand situations with ... assuming constant supply and constant demand...  basically zero return.  Preservation of wealth. 


BONDS.  Bonds yielded good returns adjusted for inflation until inflation began in the 30s.  Since then, adjusted for inflation, government bonds yield very little after inflation.  After inflation and taxes, their yield is decidedly negative.  $100,000 invested in long term bonds in 1945 was worth about (adjusted for inflation and taxes) $40,000 50 years later.  Not very good. Inflation helps the government cope with its debt load, but it essentially steals money (transfers wealth) from persons saving dollars to the government.   Bonds had a 15 year bear market culminating in1980 with interest rates sky-high.  They have had more or less a 30 year bull market since, possibly culminating in 2008 when the yieldon the 10 year went to 2%. 

Bank CDs are, thus, an even worse investment.  


CASH.   A dollar saved in 1802 was worth, adjusted for inflation, about a buck until the roaring 20s when it dipped a little.  The dollar saved in 1802 began to lose purchasing power in earnest in the 40s and by 1996 it was worth (adjusted for inflation) about 8 cents.  Today it would be worth even less, perhaps a nickel.  


STOCKS.  So cash loses, Bonds have (as the bull market in bonds continues) probably roughly broke even since WW2, although they aren't likely to break even from here...  buy them when they are down and they can be good investments, buy them when they are up and they can be big losers, overall they are break even or worse.  Gold is a long-term break-even that does fluctuate at times, giving the occasional good buying opportunity and perhaps the occasional bubble.  Commodities seem to be bascially zero return investments excepting the occasional bubble, anti-bubble, and substantial changes in supply and demand.  

So what about stocks?    From 1802 to 1996, adjusted for inflation, stocks returned 7% (including reinvestment of dividends and adjusted for inflation).  There are bumps and blips on this super-long-term chart (indeed, the great depression doesn't look that dramatic when viewed over the course of 200 years.  At the march lows stocks had not gone up in about 13 years, adjusted for inflation, or so.  I didn't cacluate inflation -vs- dividend reinvestment.  

Stocks win, they beat inflation.  The chart is remarkably linear (blips aside, and believe me I get that some of those "blips", like the market crash of the 30s, are hardly trivial).  

And now we are in a situation where stocks, adjusted for inflation and dividends, probably aren't up in 10-15 years.    This is rivaled only from the period starting in the early 1900s to 1920 or so and the period from the mid-60's until the beginning of the big bull market in the 80s.  And the Great Depression.

So in a 200 year history of stocks in the US, per Siegel and Dreman, we're in teh top 4.  That doesn't mean this one couldn't go on to become #1... and that doesn't mean that stocks bought today won't go down or even down alot at somefuture point... but it does imply that today remains an attractive long term entry point.  


Re-reading Dreman (the only how-to book on investing in equities, or investing at all, that i've ever thoroughly read) has tempered my recent bearishness...  Its quite likely based on  a look at the history of equity returns that we are probably still at a good entry point...  We were probably at one of the best entry points in history in March.  

More to come on hyperinflation and massive economic collapse and the like.

35 Comments – Post Your Own

#1) On October 24, 2009 at 6:31 AM, kaskoosek (29.91) wrote:

I love your analysis, though I think the data is inadequate.


Stocks are a much worse performer than gold and other commodities, though in your example this does not show that due to the fact that the data covers the case of the US only. The US has been blessed for the last 100 years, with no significant wars on its land and much less revolution. Therefore in my opinion there is a bit of survival bias which is clouding some of the results.


Gold would outperform stocks by a wide margin in societies where there is much more turmoil, due to the fact that gold is less resistant to shocks. 


I thinks that one of the best asset classes is real estate. Though risk wise, it safer than stocks though a bit more risky than gold due to taxation and confiscation. 

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#2) On October 24, 2009 at 9:27 AM, portefeuille (98.32) wrote:

Have a look at this article on Siegel method of calculation and survivorship bias. Also have a look at comment #5 here. I tried to make him stop the printing press for the Wall Street Journal (via email conversation with him). He would not really listen. Oh well ...

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#3) On October 24, 2009 at 9:34 AM, portefeuille (98.32) wrote:

My second idea for your hedge fund (after ATPG) is EMC Information Infrastructure. That of course is not a stock, but you can get close buy buying EMC shares and selling short the appropriate amount of VMW shares. Some very "preliminary" numbers are here.

EMC has cash and investments of ca. 8.4B, debt of ca. 3.1B, ca. 84% of VMW market cap. is ca. 14.9B, market cap. of EMC is ca. 35B. Subtract the VMW shares and net cash and you are left with the EMC Information Infrastructure business ("storage") for ca. 14.8B, ca. 7.3$/share. That business made ca. $0.197 of the ca. $0.232 non-GAAP Q3-09 earnings that EMC just announced.


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#4) On October 24, 2009 at 9:38 AM, portefeuille (98.32) wrote:

Also have a look at my very preliminary EMC "pitch" here.

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#5) On October 24, 2009 at 9:42 AM, portefeuille (98.32) wrote:

I tried to make him stop the printing press for the Wall Street Journal (via email conversation with him).


#21) On May 19, 2009 at 11:34 AM, portefeuille (99.98) wrote:

The beginning and end of his article are okay (at least they are free of flaws).
I suggested to him that he should either correct that flawed part or leave it out but he apparently had this "idée fixe" that S&P was doing something wrong.
Maybe he did not take my advice that seriously because my email adress was from the physics department of my university ...


(from here)

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#6) On October 24, 2009 at 10:17 AM, Entrepreneur58 (37.54) wrote:


Could the nearly 30 years of falling interest rates have skewed the data in favor of bonds and stocks? 

If rates are close to zero, are they likely to fall very much more? 

If we now have 20 years of rising rates, what will be the best performing asset class during that period?

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#7) On October 24, 2009 at 10:35 AM, checklist34 (99.06) wrote:

Dreman goes on to describe what happens to equity values (real values) in cases of hyperinflation, war (resulting in massive economic trauma) and occupation, and more.

Per Dreman:

1.  German equities had regained their purchasing power (adjusted for inflation) by 1929 despite hyperinflation in the Weimar Republic.

2.  German equities lost 90% of their value during/after WW2, but by the late 50's German markets had regained their previous highs in real purchasing power.  

3.  by 1945 the Japanese stock market had dropped more than 90% from its previous highs in the early 40s.   Japanese equities more than recovered in time.  Japanese bonds never recovered.

4.  He mentions that equities are initially hit hard in hyperinflation (citing long periods of high inflation in Brazil, Argentina, and others) but recover their full pre-inflation purchasing power and more in time.  


Basically, Dreman offers that hyperinflation, if it sets in, would not, in the long run, decimate the value of equities as a whole.  


Adding to this general set of commentary, I would observe that from 1900 (when Britain was the dominant world power) to 2000 (when the US was and Britain had been through 2 world wars and was far from a dominant force in the world...  US and British equities offered the same return. See here  Based on the data presented in that graph, it would appear that Britains equity markets survived their fall from supremacy.


The whole time I've been looking at CAPs blogs and the stock market, negativity has swirled and dominated.  And returns have been awful for a long time now (10+ years).  I am reminded this evening that historically that has been a very good time to buy. 


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#8) On October 24, 2009 at 10:53 AM, portefeuille (98.32) wrote:

Roubini on gold in a recent interview

----------------------- When you say “stay away from risky assets,” many people hear that and think, “Aha, gold!”

Roubini: I don’t believe in gold. Gold can go up for only two reasons. [One is] inflation, and we are in a world where there are massive amounts of deflation because of a glut of capacity, and demand is weak, and there’s slack in the labor markets with unemployment peeking above 10 percent in all the advanced economies. So there’s no inflation, and there’s not going to be for the time being.
The only other case in which gold can go higher with deflation is if you have Armageddon, if you have another depression. But we’ve avoided that tail risk as well. So all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense. Without inflation, or without a depression, there’s nowhere for gold to go. Yeah, it can go above $1,000, but it can’t move up 20-30 percent unless we end up in a world of inflation or another depression. I don’t see either of those being likely for the time being. Maybe three or four years from now, yes. But not anytime soon.


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#9) On October 24, 2009 at 11:10 AM, portefeuille (98.32) wrote:


(from that book by Siegel)

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#10) On October 24, 2009 at 11:17 AM, portefeuille (98.32) wrote:

Have you noticed the underperformance of biotech stocks as of late?

NASDAQ biotech index vs. NASDAQ composite index and S&P 500 index.



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#11) On October 24, 2009 at 11:18 AM, portefeuille (98.32) wrote:

That would be my third recommendation for your hedge fund. "Overweight" on biotechs ...

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#12) On October 24, 2009 at 11:30 AM, portefeuille (98.32) wrote:

I have never read a book on investing, so you are one book ahead ...

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#13) On October 24, 2009 at 12:19 PM, checklist34 (99.06) wrote:

that last post by me was written last night and I aparently forgot to hit "submit your post", so it just got put up right now. 

I found a graph here:

that is decidedly different than the data presented by Siegel/Dreman.  It is also poorly interpreted by its author in my view.  See here

It would appear to me that from 1855-1929 stocks decidedly beat bonds.  It would also appear to me that from about 1932-33 to 2000 stocks decidedly beat bonds.  


These very different graphs (Dreman, which I don't have a picture of, vs this one)still basically tell thesame story.  Stocks win big over time.  

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#14) On October 24, 2009 at 12:30 PM, checklist34 (99.06) wrote:

kaskoo:  Thanks for the compliment.  I believe I have read somewhere that onloy stocks and real estate outperform inflation over time. Population growth basicallysets in stone that real estate will be at least a decent long term investment provided you don't buy it in a "bubble". 

Dreman offers that equities in war-battered countries (including Germany and Japan) and countries with other instability and inflation and such have still outperformed inflation over time.  Including Japanese stocks from pre-WW2 to post-WW2.  

I do suppose that in a case where, say, a regime change resulted in nationalization of industry or something, holding equities could be disastrous.  But in cases of sudden inflation, holding bonds and other debt instruments is disastrous. 

I don'thave data for all of time or all of the earth, but I was fascinated to find achart showing that from 1900 to 2000 UK stocks matched US stocks for performance.  2 wars were on, over, or close to UK soil and that period saw the fall of the British empire come to completion.


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#15) On October 24, 2009 at 12:47 PM, checklist34 (99.06) wrote:

porte that is a very interesting play on EMC. 

I wish I had been slightly better versed in markets, economics, and investing before this year...  as while my one big pick at the market bottom (financials, mostly non-bank financials) has gone extremely well, I am stuck with an intensely non-diversified portfolio and a diminishing desire to trade in and out of various stocks (and pay the associated taxes).  

cool posts and links. 

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#16) On October 24, 2009 at 12:55 PM, checklist34 (99.06) wrote:

entrepreneur, thats a great question.

if we now face 20 years of rising interest rates, bonds will perform poorly and thats basically a given.  Stocks have badly underperformed in the last 10 years (while rates were still falling) and that would suggest that they definitely have a leg-up on bonds.  I think long term gov't bonds right now will be one of the worst investments for the next 10-20 years.  

Commodities should outperform in the early stages of significant inflation, but otherwise aren't likely to except as noted above.  

I don't konw the answer, I'm just thinking out loud....  er...  thinking in type.  

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#17) On October 24, 2009 at 1:44 PM, checklist34 (99.06) wrote:

Porte, ... i get the logic with the biotech thing.  I am cautious about biotech stocks in general because I don't, in general, understand them at all. 

My favorite current play remains RJET simply because its valuation on earnings is already fairly cheap, and its valuation on earnings compared to the potential of the "sum of its parts" is extremely cheap.  And I think it has very competent management.

RJET earned ~$80M in 2006/2007/2008 wiht its fly-for-others business.  It made $14M last quarter.  That translates to a p/e for normalized times of around 4 based on current market cap, or around 6 based on the most recent quarter...

It added Frontier and Midwest for basically nothing.  Frontier has been profitable every month for the last year and recently has been running at ~$10mil/month prior to emerging from bankruptcy.

RJET has offered that they anticipate $20-$50m/year in cost svaings from combining all these operations.

They recently unloaded their stake in Mukucookoolelelukoopookoohooka in Hawaii for ~$3mil, it was losing significantly more $$ than that so this seems like a good move.

If you want to take a "good case" scenario, take $60M RJET profits + $100M Frontier profits + breakeven at Midwest + $30M cost savings and you wind up with nearly $200m of profit potential for a year (a "best case" could go higher I suppose).  Current market cap is ~$300M.  If it traded to a p/e of 6 that would be a multiple of current share price.  A best case with a p/e of 10 and a better E outcome could go higher, and excepting a disaster scenario where Southwest attacks and destroys them ... I don't konw how much downside the shares can really have from my cost average of 7 bucks.


Beyond that my favorite play is small or micro cap regional banks.  Many of these are hitting 52 week or all time lows right now, and at least a few of them are drawing "buy" ratings from analysts at Stifel (I like Stifel's analyst reports and they have a good track record).  Generally these are heavily laden with commercial real estate loans and so forth, and they may represent a way to bet that CRE won't implode as badly as people think it will.  

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#18) On October 24, 2009 at 2:43 PM, Entrepreneur58 (37.54) wrote:


With regard to comment #8, Roubini says there are two things that can make gold go up, inflation, and failure of the economy to grow sustainably.  He is missing the third thing.  The third thing is the most important thing and everybody misses it.  Even the Fed misses it.  Gold goes up when balance sheets deteriorate past a certain point - particularly the federal government's balance sheet.  If the federal government's balance sheet continues to deteriorate rapidly, gold has plenty of room to the upside regardless of the economy or inflation.

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#19) On October 24, 2009 at 3:42 PM, portefeuille (98.32) wrote:

EMC has cash and investments of ca. 8.4B

Around 2.2B of that is sitting at VMware, so for the purpose of my little calculation you would have to replace 8.4B by 6.2B. That still leaves you with a pretty cheap "EMC stub".

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#20) On October 24, 2009 at 5:36 PM, checklist34 (99.06) wrote:

Entrepreneur, ...  I don't know about Roubini's comments there.

Gold is a commodity with some basic supply and demand for places its used (eletrical connections at times, jewelry, wherever else).  Right now almost certainly the biggest demand is people buying it as an investment.  And right now its well above "inflation", historically gold has always been worth "inflation", a zero return adjusted for inflation and its well higher than that now.  

If I was to buy a commodity for an investment, I'd pick one that wasn't above its long term average...  none come to mind as I'm just not that familiar with commodity investing, but that's about where my mind would go.

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#21) On October 24, 2009 at 6:46 PM, rofgile (99.57) wrote:

Biotech does seem to be lagging, but throughout the rally.  On the flip side, some biotech didn't get knocked down as low in the crash.

Example for this is GILD -

It was $48 before the crash, reached a low of $39 then came back up and now is only around $44.   GILD beat earnings, and has positive guidance but is trading at a discount compared to the last several years.  Also, this is a drug company with lots of good potential treatments in the coming years.  

Is the biotech lag occurring due to the current health care debate?


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#22) On October 24, 2009 at 7:12 PM, whereaminow (< 20) wrote:

I enjoyed this conversation. Thanks for bringing this up.  I go back and forth on gold. Some days I'm very interested in buying it, other days I am not.

Today I picked up an article by Gary North that was quite radical.  He was saying that gold does not have any intrinsic value.  It was worth the read.  He pointed out that gold can not be considered a hedge against inflation.  If it was, it would outperform in times of inflation, and it does not always do that. If anything, North's conclusion is that gold is just like any other item considered precious in society - like art. Its value comes from the values of the actors in the marketplace.

That conclusion is indeed radical, because it implies that there is no objective price for gold.  There is no reason to believe that gold will rise due to inflation, nor is there any reason to believe it will fall due to deflation.   

David in Qatar

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#23) On October 24, 2009 at 9:32 PM, PaxtorReborn (28.93) wrote:

the suggestion that stocks win suggests that you are an immortal vampire.  What if you bought into the market in your younger years and planned to retire on your savings in 1930?


It also assumes that the broad market ETFs that exist today existed in the 1910s.

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#24) On October 25, 2009 at 1:19 AM, checklist34 (99.06) wrote:

rofgile, i'm not familiar with GILD or really any biotech stock.  I have a few shares of INSV.OB, roughly 0.05% of my portfolio, lol, and thats it.  I bought that due to 5 star CAPs ranking and some FDA approvals, i was 2.5x my money on it for 1/2 a day but it quickly came back down.

GILD's long term stock chart is epic.  As straight-up of a line as anything I can remember seeing for 15 years now.  Its not grossly overvalued by p/e's.  Good growth.  

I don't know.  I first dipped into the market around the turn of 2008/2009 for the sole purpose of buying into the huge crash, and as such Iwouldn't have looked for 3 seconds at GILD as I was mostly looking for forward p/e's less than 4 or 5 and price/books of 0.5 or less, etc.  

But it may be a good buy.  I simply don't know enough about it or the biotech world to really offer up an opinion, hence my abstinence from biotech investing...  


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#25) On October 25, 2009 at 1:26 AM, checklist34 (99.06) wrote:


    Interesting link.  To throw out a thought about gold...  people have obsessed over it long enough to probably assume it'll always be worth something.  And for 200 years its been worth roughly inflation, with significant variations from that beginning in the 70s (and culminating in the big spike in 1980), followed by a big drop to below inflation by2001, and another run above it now.

    Maybe ...  golds lack of intrinsic value to society (the way, say, oil has an intrinsic value) has created a  now semi-volatile commodity that will flutter around above and below (maybe sometimes far above and far below) inflation in the future. 

    I got nothing on gold, but I remain absolutely not bullish on it...

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#26) On October 25, 2009 at 1:32 AM, checklist34 (99.06) wrote:

Paxtor:  stocks do seem to come with some respnosibility to keep an eye on "fair value". 

If buy and hold was ... dismissed as an idea and just replaced with "buy, mostly hold, but be reasonable" returns could be astounding.

Buy and hold, except ... don't hold stocks that have become overvalued (for me LVS and WYNN have gravitated into this realm recently in my view, so I hedged them).  Define value in some fairly tangible way, like based on historic market valuations or something.

And don't hold through a bubble.  Again use historic market valuations to define a "bubble".  The bubble that culminated in 1999/2000 saw record valuations on almost any measure.  

Thats a post for a future day.

I would observe that cash or bank CDs or bonds are not a whole lot better.  

What if you planned to retire on gov't bonds in 1980?  On cash in 1970 just before enormous inflation set in for a decade?  Your well planned retirement would have come up quickly short...

Similarly, what if I had held on to my businesses last year and planned to retire on them?  What if 3M got interested in the industry and the businesses could not compete?

No investment is "safe".  But since WW2, even up until now atwhatis likely to be the top of a very long bull market in government bonds, and maybe even a bubble...  have bonds been winners after inflation and taxes?  Stocks have, even to today, 10 years intoa huge bear market.  


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#27) On October 25, 2009 at 8:24 PM, TigerPack1 (33.61) wrote:

Perhaps the best "asset class" to own the next 10-20 years, as inflation rates run wild, is an investment that plays both real estate and the stock market!

Such an investment hybrid exists today [with only 20-30 years of decent pricing data] and goes by the name Real Estate Investment Trust (REIT)!!!

If you are a buy and hold investor looking for the best risk-adjusted place to put your dollars, purchase REITs the next month or two as stocks sell off generally, collect your 5%+ in annual dividends and wait for inflation to work its magic on the underlying assets levered at reasonable rates of interest on debt and debt to equity.

I am figuring compounded total returns of 15%-20% annually will be a cinch the next 5-10 years in many of the leading REIT names, given an average inflation rate of 10% per annum and slow economic growth.  If you factor in better economic growth and/or higher inflation, these numbers will prove too low as many REITs are still selling close to their book value numbers or liquidation values at current depressed real estate prices. 

Good debate here, thanks checklist for getting it started.

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#28) On October 25, 2009 at 11:54 PM, checklist34 (99.06) wrote:

Thanks Tiger.  Thats an interesting thought...  REITs are subject to both the fluctuations and moods of the equity and real estate markets. 

...  REITs, like energy stocks, are things I ultimately decided not to buy all that much of in jan-march.  I own some HPT, HST, FCH preferreds, DDR and others...  but my total REIT holdings don't add up to my stakes in any of (each alone) TCK, ASH, XL, GNW and others I bought back when they were cheap. 

I will have to give some thought to this idea, it is very interesting.

I wouldn't bank on 10% inflation as a given, however...

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#29) On October 27, 2009 at 12:49 AM, ahobbs (< 20) wrote:

Ignore the last 10 years behind the curtain!

Period from 10/1/1999 to 10/1/2009:

Annual real return of SPY = -3.2%

Annual real return of VFITX = +4.0%

Not convinced that the next 10 years for stocks will be any better...

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#30) On October 27, 2009 at 1:14 AM, checklist34 (99.06) wrote:

the odds favor it being better, ahobbs.  We are now (still, even after the rally) under the long term trendline.

UK stocks stayed on the trendline (and returned as well as US stocks over the last 150 years) despite the UK going from preeminent world power to also-ran, losing reserve currency status, and more.

We aren't there yet, no reason to assume doom.

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#31) On October 28, 2009 at 10:03 PM, sentinelbrit (56.63) wrote:

I've noticed biotech stocks are underperforming. I put it down to risk aversion returning to the market, the lack of take-overs in the sector and I'd say a lack of good news from the companies themselves.

Re the US market : after spending a good part of my life in the UK (I'm now in the US) and covering markets in Europe, I'd say, you can't beat the US market for the choice of stocks. It is truly amazing and is unrivaled anywhere in the world. This choice gives the investor a lot of opportunities to beat the indices.


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#32) On October 29, 2009 at 4:57 AM, hud500 (56.89) wrote:

check - what stats do you use to say stocks are still under the long term trendline?

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#33) On November 02, 2009 at 2:07 AM, checklist34 (99.06) wrote:

thanks for the input brit, you make alot of interesting posts.

Hud, just the long term average for stock returns thats held pretty much for 200 years (with some considerable deviations above and below it).  In the 2002 bear marmket we dipped basically to the top of that line or slightly below it, and today we remain below it even after the big run-up.  :)

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#34) On November 03, 2009 at 7:57 PM, ahobbs (< 20) wrote:

"We are now (still, even after the rally) under the long term trendline."

Unless, of course, you normalize for earnings.  We're still way above the historical median PE ratio with a much smaller dividend yield...

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#35) On November 03, 2009 at 10:40 PM, checklist34 (99.06) wrote:

smaller dividend yes, P/E depends.

the dividend is partly related to the massive, widespread dividend cuts in financials and cyclicals.  Dow, AA, XL, HIG and every other insurer on the S&P, every bank on the S&P... 

the other part of the dividend being so low is that tech stocks like dell, cisco, etc. have hardly ever paid dividends but rather repurchased shares.  I strongly doubt that share repurchases are as helpful to shareholders as dividends paid...  but the facts are the facts, these things work to lower the yield on the S&P today.

the normalized p/e is about 14-15, hardly expensive.  the way to come up with a p/e that looks really expensive is to look at trailing 12 months and factor in generationally high auto losses, AIG, and the bizzarities of mark to market and its permanently negative effect on earnings.

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