Well, a major warning that some people have noted is what happened in Japan. Maybe over 30 year time horizons stocks will beat GDP, or bonds, or whatever. But the Nikkei remains far below its heights of late 1989 and has not gotten near them. Something similar could happen in the US where we have clearly gotten into a wild scene of historical overpricing by any measure, as happened in Japan in the 1980s. Barkley Rosser On Wed, 27 Jan 1999 20:10:19 -0800 Michael Perelman <michael at ecst.csuchico.edu> wrote:
> I do not have much to contribute to the debates about 30 year trends. However
> in the shorter period, I think we have to take account of the powerful forces
> that had shifted the distribution income and wealth so dramatically. While some
> of this income is used for consumption, with the decline in job security,
> pensions, and faith in social security, many affluent people are scrambling to
> accumulate wealth. Without a great deal of increase in the real physical
> capital that constitutes the basis for such investments, people are scrambling
> to invest in equities, driving stocks to astronomical heights, probably creating
> a bubble in the process.
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael at ecst.csuchico.edu
>
>
-- Rosser Jr, John Barkley rosserjb at jmu.edu