OPINION

Yeah; It's Different This Time

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Here they come, right on time. 

I’m referring to all the pundits who proclaim the power of the stock market.  It goes something like this:  If you had been wise enough to avoid the 2008 stock market crash, then obviously you would have been knowledgeable enough to hear the bell ring, which gave the “all clear” signal on March 6, 2009. 

In other words, you would have known that 3/6/09 was indeed a major bottom of the market, thus you would have fully deployed your money into stocks and ridden the Dow Jones gravy train upwards to the extent of approximately 8,000 points, receiving a very handsome gain of about 118%. 

And since your timing was proven to be so ideal, I’m certain that you also avoided the 2000 dot-com debacle. 

Hence, when all others were declaring the dot-com era as the new paradigm and 23-year-old CEOs with innovative internet ideas — backed by millions of dollars from Wall Street — were acting like the next Carnegie, Rockefeller, or Du Pont, you most certainly said, “Phooey, I’m not being suckered.” 

With that said, you definitely knew that the five-year period of 2003 to 2007 would produce over 50% on your money. 

Yes, it’s clear as a bell to all the money managers, financial talk show hosts, and financial columnists, that when you make your decisions in hindsight you’re usually 100% correct. 

These so-called experts will throw stones at those who look at the world and see difficult times, and just say it’s only a “wall of worry — stay invested.” 

They’ll also chide those investors who did enter the stock market in January of 2000 on their advice, only to be burned. 

Unfortunately, the very same investors said, “I’ll listen to you again,” and entered the stock market in 2008, only to be badly burned for a second time. 

Those that were seared will forget the past and simply say, “It’s different this time.” 

But had investors rolled the dice at the stock market top in 2000 and stayed the course, they would have realized a whopping 13.25 year return of 4.95% year-to-date — that’s 0.37% per year, obviously well worth the angst and aggravation. 

Incidentally, that’s not quite as good as Ben Bernanke’s current zero interest-rate policy (ZIRP), but it’s pretty darn close. 

Ahhh, stocks for the long run — gotta love ‘em — especially when the pundits are blowing their horn and you need to earn 4% on your investments per year in order to make ends meet.