| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 476.1 | Back to the past? | SLOAN::HOM | | Thu May 20 1993 00:01 | 21 |
| Some thoughts:
1. in the 1980's, with mortgage rates in hitting 15% and Treasury
bonds hitting 13% (risk-free), no on thought the rates would
drop below 7%. They have.
2. anyone with anything in a diversied portfolio in the 80's
did well.
3. in general, what worked in the past may not work for the
1990's. (On this I agree with JH).
I expect that equities will return on average (SP500) less than
10% a year. Investors expecting returns comparable to the 1980's
will be disappointed. Paying down a mortgage (despite the attractive
low rates) may be the best way to go.
Gim
|
| 476.2 | | VMSDEV::HALLYB | Fish have no concept of fire | Thu May 20 1993 13:18 | 25 |
| .0> ... whether we can predict anything
> from the fact that a whole generation of people now think that
> equities are the way to go.
I am not part of that generation, but there's no denying "most" people are.
First, it should be noted that this is characteristic of market tops.
Back in 1974 when equities were dirt cheap -- nobody wanted to buy them.
I remember the times well, and was one of those who felt the odds were
better in Las Vegas (where I lived :-) than in the market. Big mistake;
major contrarian buy signal.
Now it's the other way. Everybody owns equities "for the long term".
Big mistake; major contrarian sell signal. That's a prediction.
This phenomenon was well-known at least as early as 1900 and likely
long before then. But at .0s request we'll skip the history lesson.
I don't quite know how to phrase it, but this generation has "learned"
that the US government's creditworthiness is unquestioned. People are
placing all kinds of trust that 20, 30 years from now the Government
will be able to pay off on promises made to voters today. It won't
happen, or if it does the payoff will be in microdollars, a la Germany
1923 hyperinflation. Too bad Germany doesn't offer 30-year bonds...
John
|
| 476.3 | We agree, US is not the place for the 2000's | TLE::JBISHOP | | Thu May 20 1993 14:59 | 12 |
| So John H., what's the contrarian strategy? Sell equities, buy German
bonds?
My current long-term plan is to move my investments out of the US over
the next two decades, but I'm using equities (e.g. T. Rowe Price
International Stock Fund, etc.). I'm doing this because I fear
stagflation when the "boomers" retire. I'm currently investigating
emerging markets funds--as their '80s fame fades they should be good
long-term bets (unless you think the population/pollution problems will
make 1990 the high-water mark for human happiness).
-John Bishop
|
| 476.4 | Long term tips | SQGUK::LEVY | The Bloodhound | Thu May 20 1993 15:33 | 20 |
|
Taking a long term view I think the drug companies must have
an assured future. The population is getting older, and health
is something that people are not prepared to sacrafice.
Also as the world develops, (in those emerging markets), the drug
companies will get their slice.
I'd also watch the soft drink companies as they can always profit
from the price the market will bear. It seams unlikely that their
products will go out of fashion too.
My last tip is the retailers as the good, organized ones seem to be
able to carry on growing over a long period of time. They also
benefit most from economies of scale, as they squeeze everyone else.
In the UK this is demonstrated by Tesco, Sainsbury and Marks & Spencer.
Malcolm
|