This emphasis on the 30-year time horizon is very misleading and selective. Thirty years is a long time, too long for a lot of people alive today, including many who are not so old and may not realize it. At not terribly much shorter intervals we have seen some much worse records of performance. Thus the DJIA hit 1000 for the first time in 1966. But it was not until 1982 that it definitely moved well above that level and stayed there. Somebody buying at the peak in 1966 had to wait 16 years to get even a definite positive return, although there were brief blips in the intermediate period when it got that high again, e.g. 1973.
We have just had several years in a row of almost unprecedented returns in the stock market with extremely high price/earnings ratios now holding (and other related ratios as well). Plus we have had a lot of buying back of stocks reducing their supply. I think the skeptics have a lot of reason to worry, although I find it odd to be on the same side as Greenspan and the Republicans on this one (and their opposition has other sources than does mine). Barkley Rosser On Mon, 25 Jan 1999 19:14:27 -0500 Greg Nowell <GN842 at CNSVAX.Albany.Edu> wrote:
> If you say that stocks outperform gdp by an historical
> avg of about double, then this cannot be finessed in
> your article (well, I suppose you did finesse it, but
> you get my meaning), as on the one hand, you say that
> SS private funds can't outrun gdp (or imply it), and on
> the other hand, you're featuring front and center data
> to the contrary. In other words it's an important
> point that should get some ironing before we charge out
> into the wider world with it.
>
> Now, for my part, I am in sympathy with the general
> drift of the article in any case. But it doesn't help
> when I come away scratching my head. I'm supposed to
> understand "our guys." Most of the time, anyhow. -gn
>
> --
> Gregory P. Nowell
> Associate Professor
> Department of Political Science, Milne 100
> State University of New York
> 135 Western Ave.
> Albany, New York 12222
>
> Fax 518-442-5298
>
>
-- Rosser Jr, John Barkley rosserjb at jmu.edu