Lies can last for a long time, but they are still lies
So, I am calling the "truth" that the stock market always goes up and you are always better off investing there a lie.
The last twenty years of the stock market has ridden a world credit bubble and the market has risen beyond reasonable valuations. Today it sure does look like it doesn't really matter when you invested, only that you did invest to have improved your financial position.
But... what about the level of earnings on the market? I was reading an article, http://www.safehaven.com/article-8817.htm, and point 4 which I've copied below is worth strongly taking into consideration,
"#4. Consensus Values
Like their politicians, democratic societies tend to deserve the financial markets that they get. After all, financial markets express the values of society. Analysts may argue that "fundamentals" and "historical benchmarks" set the valuation envelope for asset market levels and trends. Yes, historical statistics have their uses, but frankly, they tell us little about the secondary and tertiary conditions that gave rise to them in the first place. For example, the average dividend yield of the S&P 500 over the 20 years between 1940 and 1960 cannot be directly compared to the average yield that existed during the 2 decades between 1987 and 2007. (Respectively, 5.27% and 2.24%, the former more than twice the latter.) These statistics embrace many differences, most significantly two different societies -- two sets of values and beliefs. In this comparison, the former society was a risk-averse, industrious, post-war society with modest expectations that couldn't be more different than the over-indebted, over-inured household of today. As another illustration, Figure #3 shows the changing value of labor income versus stock market capital."
The part that really gets me is the 5.27% yield versus the 2.24% yield, or a yield that was more than double, actually 135% higher. Say the Dow at 13,000 does in fact give a yield of 2.24%. The Dow would only be 5500 to give that 5.27% yield. If you were to assess the Dow with a reasonable yield and a comparable yield to say the 1940-1960 period has the Dow really been that great?
I say it has not performed on equitable fundamentals and over the years people have accepted more and more risk for less and less return.
Some thing else in the article that got my attention,
"A heavy reliance on capital gains for income and reported profits."
My Jones Soda post last April, http://caps.fool.com/Blogs/ViewPost.aspx?bpid=7370&t=01004034443672390362, I torn into just how the company was making its money and deferred taxes and interest on an equity offering was where more than half of the income came from, and at the time the stock was trading at an insane P/E of over 100, so the market leverage interest earned to more than 100 times its value. Interest on the equity offering isn't capital gains, but it isn't business earnings. Many companies have non-business items fluffing their apparent P/E and trading based on an artificial P/E.
I am shocked when I look at companies and how many have non-earning kinds of items making up their profits. This is deadly for preservation of capital...
The safehaven article is well worth a read.