mellon wrote:
seattle prattle wrote:
My belief is that the fed, the president, and the congress know that since the demise of the common pension and the advent of the 401K, that the retirement viability of vast portions of our population are dependent on the solvency of the stock market, and they will do what they can to see it does not adversely impact the majority of the population.
Igy: You've often question my reasoning for my "It's Different this Time" belief. Asking why I feel that way.
I posted why shortly after I got on here, but have never had the energy to dig back (probably 4 years ago) for that post. Or, re-post it.
But when I read this one, it is pretty much what I posted back then in a nutshell.
Mellon,
Ok, that is fair. A contrary view, which I ascribe to, is that the Federal Reserve’s policies have created a massive asset bubble in stocks, bonds, commercial real estate and residential real estate. So what have they really delivered beyond massive amounts of debt throughout all levels of our society? Even at the February 2019 month end the 20 year inflation adjusted S&P 500 Index return is a meager 1.915% and with reinvested dividends 3.810%. Now my view is that it does not matter how high the market goes the reversion from this policy nonsense and overvaluation will take the market to around 1,000-1,200 S&P 500. Now I am sure you and others may be able to navigate a downturn to your advantage, but investors as a class cannot since every share must be held by someone thru each moment in time. I have no reason to wish anyone a bad investment outcome, however as an intellectual debate I see the conventional market belief driven by speculation and not driven by much that can be anchored to past market experience. Of course this goes to the heart of Quantitative Easing, negative interest rates, the wisdom of leveraging the corporate balance sheet to buyback stocks or pay dividends; really anything that has driven the mania of this investment era. Absolutely I can be wrong, my view is a practitioner in a social science and certainly human behavior is far from rational.
Good luck to you Mellon.
Igy