Regarding market predictions, the post had this to say:
The phrase "double-dip recession" was mentioned
10.8 million times in 2010 and 2011, according to Google. It never came. There
were virtually no mentions of "financial collapse" in 2006 and 2007.
It did come. A similar story can be told virtually every year.
Since 1871, the market
has spent 40% of all years either rising or falling more than 20%. Roaring
booms and crushing busts are perfectly normal.
Apple increased more than 6,000% from 2002 to 2012, but
declined on 48% of all trading days during that time period. (Investing is never
a straight path up.)
Polls show Americans for the last 25 years have said the
economy is in a state of decline. Pessimism in the face of advancement is the
norm.
A broad index of U.S. stocks increased 2,000-fold between
1928 and 2013, but lost at least 20% of its value 20 times during that period.
People would be less scared of volatility if they knew how common it was.
There were 272 automobile companies in 1909. Through
consolidation and failure, three emerged on top, two of which went bankrupt.
Spotting a promising trend and identifying a winning investment are two
different things.
According to economist Tim Duy, "As long as people have
babies, as long as capital depreciates, technology evolves, and tastes and
preferences change, there is a powerful underlying impetus for growth that is
almost certain to reveal itself in any reasonably well-managed economy."
The post had a few zingers about some of the best-paid
executives in the financial and investment community:
Twenty-five hedge fund managers took home $21.2 billion in
2013 for delivering an average performance of 9.1%, versus the 32.4% you could
have made in an index fund. Hedge funds are a great business to work in -- not
so much to invest in.
In 1989, the CEOs of the seven largest U.S. banks earned an
average of 100 times what a typical household made. By 2007, that had risen to
more than 500 times. By 2008, several of those banks no longer existed.
And finally, if you want to understand the difference
between daily fluctuation and the underlying growth of value in the markets,
consider this:
Investor Ralph Wagoner once explained how markets work,
recalled by Bill Bernstein: "He likens the market to an excitable dog on a
very long leash in New York City, darting randomly in every direction. The
dog's owner is walking from Columbus Circle, through Central Park, to the
Metropolitan Museum. At any one moment, there is no predicting which way the
pooch will lurch. But in the long run, you know he's heading northeast at an
average speed of three miles per hour. What is astonishing is that almost all
of the market players, big and small, seem to have their eye on the dog, and
not the owner."
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