The investing environment has changed dramatically in the past
10 years: from taken-for-granted, double-digit annual returns in
stocks to double-digit losses and, now, gains that are not even
half of what they used to be; from a bubble-fueled mania that led
to a complete disregard for fundamental values to the painful aftermath
of the bursting of the stock bubble and, maybe, the
painful aftermath of the bursting of a second bubble, in housing;
from the expectation that you can retire early—and rich—to the
fear that you cannot retire at all—and certainly not rich.
On the positive side, the battle against inflation, which began
in 1979, has been won, bringing with it all the benefits that come
with price stability. But there is even a downside for investors to
that victory. With very low inflation the threat to the economy
becomes deflation. And with stable prices, speculators are happier
and market bubbles are more likely.
10 years: from taken-for-granted, double-digit annual returns in
stocks to double-digit losses and, now, gains that are not even
half of what they used to be; from a bubble-fueled mania that led
to a complete disregard for fundamental values to the painful aftermath
of the bursting of the stock bubble and, maybe, the
painful aftermath of the bursting of a second bubble, in housing;
from the expectation that you can retire early—and rich—to the
fear that you cannot retire at all—and certainly not rich.
On the positive side, the battle against inflation, which began
in 1979, has been won, bringing with it all the benefits that come
with price stability. But there is even a downside for investors to
that victory. With very low inflation the threat to the economy
becomes deflation. And with stable prices, speculators are happier
and market bubbles are more likely.
No comments:
Post a Comment