These days, more and more people are talking about the stock market. More and more friends are trading stocks. Does this feel like 1999? Or is it more like 1989-1990? History is a good teacher. Human nature will not change. As Winston Churchill said: "Those that fail to learn from history, are doomed to repeat it."
I examined the S&P 500 price history (https://www.macrotrends.net/2324/sp-500-historical-chart-data). The following are my observations:
[1]. It appears that the S&P 500 has approximately a decade of bust trend, followed by about two decades of boom trend. Then another decade of bust trend, followed by another two decades of boom trend.
[2]. The trend is clear, but the exact time length is approximately. Each cycle could be a couple of years longer or slightly shorter.
[3]. In every bust period of about a decade, there are sometimes surges of 20-50% (These would be false bulls to fool people and suck the money in. They are bear traps.).
[4]. In every boom period of about two decades, there are multiple drops of 10%, 20%, 30% (These are good buying opportunities. Investors can buy confidently knowing that it is in a long-term boom trend).
[5]. The current boom is about 11 years old. Therefore, if history will repeat itself about the boom lasting approximately two decades, then there are several more years left in this boom period. Will history repeat itself? We shall see.
[6]. Typical S&P 500 price increase from the beginning of a new boom period to its peak: about 6-fold. If this holds true, then the current boom period will eventually reach 5000-6000 for the S&P 500 index (currently around 3900). Will history repeat itself? Will the historic trend of increasing about 6-fold be repeated this time? We shall see.
[7]. While the S&P 500 contains 500 large companies, there are many different sectors in the market. Some sectors could be having a bubble, while other sectors are not. History shows that whatever sector that goes up rapidly in almost a straight line will often form a bubble that will burst eventually, and usually hurting a lot of late comers. Therefore, one should balance courage with caution, especially in a hot sector.
Happy Chinese New Year!
By David Meng, author of book “The Intelligent Small Investor”
Thanks! We should exchange ideas and methods on how to
We should exchange ideas and methods on how to escape bubbles and get out near the top. This would help preserve our hard-earned family wealth. While predicting the future is a losing game, I thought that we could learn from history. History offers valuable lessons. The only clue to what man can do is what man has done. :)
Buffett showed a Powerpoint slide in a gathering of gurus:
Buffett knows the cycles well. In 1999, Buffett was warning people that another "lost decade" was coming. Those who studied cycles did well. Those who did not care about cycles lost big in the coming bust decade. Good leasson to learn.
Perhaps this is why the mega-cycles take a couple of decades:
In 1978, Druckenmiller was 24 years old, the youngest in his department. The big boss promoted him, the youngest guy, to lead the department of a bunch of old investors. Why? Because the old guys were scarred in the last bust decade of the 1970s and were scared. The big boss knew that a new bull market was coming, but his employees were scarred and had lost the courage to take risks. This 24 year young guy Druckenmiller did not experience the last decade of crashes and pains. He had no scarrs. That was why the boss wanted him to take the lead. Perhaps the reason that the cycle takes a couple of decades is that: (1) those who were scarred in the last bust decade takes that many years to heal; (2) a young generation enters into the market, who are unscarred and brave. That may be why it takes two decades to blow the next bubble? That may be why the history of cycles is quite repeatable, because it is human nature?
Cycles and Trends in the S&P 500 History
These days, more and more people are talking about the stock market. More and more friends are trading stocks. Does this feel like 1999? Or is it more like 1989-1990? History is a good teacher. Human nature will not change. As Winston Churchill said: "Those that fail to learn from history, are doomed to repeat it."
I examined the S&P 500 price history (https://www.macrotrends.net/2324/sp-500-historical-chart-data). The following are my observations:
[1]. It appears that the S&P 500 has approximately a decade of bust trend, followed by about two decades of boom trend. Then another decade of bust trend, followed by another two decades of boom trend.
[2]. The trend is clear, but the exact time length is approximately. Each cycle could be a couple of years longer or slightly shorter.
[3]. In every bust period of about a decade, there are sometimes surges of 20-50% (These would be false bulls to fool people and suck the money in. They are bear traps.).
[4]. In every boom period of about two decades, there are multiple drops of 10%, 20%, 30% (These are good buying opportunities. Investors can buy confidently knowing that it is in a long-term boom trend).
[5]. The current boom is about 11 years old. Therefore, if history will repeat itself about the boom lasting approximately two decades, then there are several more years left in this boom period. Will history repeat itself? We shall see.
[6]. Typical S&P 500 price increase from the beginning of a new boom period to its peak: about 6-fold. If this holds true, then the current boom period will eventually reach 5000-6000 for the S&P 500 index (currently around 3900). Will history repeat itself? Will the historic trend of increasing about 6-fold be repeated this time? We shall see.
[7]. While the S&P 500 contains 500 large companies, there are many different sectors in the market. Some sectors could be having a bubble, while other sectors are not. History shows that whatever sector that goes up rapidly in almost a straight line will often form a bubble that will burst eventually, and usually hurting a lot of late comers. Therefore, one should balance courage with caution, especially in a hot sector.
Happy Chinese New Year!
By David Meng, author of book “The Intelligent Small Investor”
We should exchange ideas and methods on how to escape bubbles and get out near the top. This would help preserve our hard-earned family wealth. While predicting the future is a losing game, I thought that we could learn from history. History offers valuable lessons. The only clue to what man can do is what man has done. :)
顶一下你的文章. 不过这件事不能当真, 仅供参考. 因为是事后划线的话, 是可以随心所欲划的. 谢谢.
其它皆不管。
房地产是最大受益者，另外房地产也是抗通胀利器，现在很多情况可以参考中国.
房地产可能才起步
现在有stress test, 至少多一层保护。只要银行系统正常运转，不太会有系统性崩溃。那么联储会的政策就是起决定性作用的。
只要不是银行体系崩溃问题，其它问题都是可以解决的。
比如说通胀压力开始大幅增大，联储会不得不大幅升息，减少流动性，那么股市必然下跌。
自从1.9T宣布以来，已经涨四倍。下面再翻一两倍没问题。
不过风险肯定比房子大。但是这年头也是撑死胆大的。呵呵。
成型，但3到5年内搞出一台专门挖矿的机器是非常非常可能的，到时系统会突然崩塌，灰飞烟灭。我还是喜欢看得到，摸得着的资产，房子，金币都好
Buffett showed a Powerpoint slide in a gathering of gurus:
Buffett knows the cycles well. In 1999, Buffett was warning people that another "lost decade" was coming. Those who studied cycles did well. Those who did not care about cycles lost big in the coming bust decade. Good leasson to learn.
In 1978, Druckenmiller was 24 years old, the youngest in his department. The big boss promoted him, the youngest guy, to lead the department of a bunch of old investors. Why? Because the old guys were scarred in the last bust decade of the 1970s and were scared. The big boss knew that a new bull market was coming, but his employees were scarred and had lost the courage to take risks. This 24 year young guy Druckenmiller did not experience the last decade of crashes and pains. He had no scarrs. That was why the boss wanted him to take the lead. Perhaps the reason that the cycle takes a couple of decades is that: (1) those who were scarred in the last bust decade takes that many years to heal; (2) a young generation enters into the market, who are unscarred and brave. That may be why it takes two decades to blow the next bubble? That may be why the history of cycles is quite repeatable, because it is human nature?