Newsgroup: it.economia.borsa
Titolo: Orso incazzato nero, e per un bel pezzo

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Long Term- Stocks Are a Lousy Investment
Stepan N. Stool, PH &D
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OK, not all the time, but about a third of the time. And those times follow
long periods of high returns, like the 1920s, and the fifties and sixties,
and the last ten years, which will be no exception. For example, if you had
bought stocks in 1958, ten years later you would have had a negative return
relative to inflation. Well, not quite, with dividends you would have had a
slightly positive return. But it got worse after that.
In 1999 and 2000, the real, inflation adjusted, 10 year rate of appreciation
on the Dow reached 12.5%, a level seen before only in 1927. Based on that,
Dr. Stool guarantees, GUARANTEES, that if you bought a diversified portfolio
of stocks at any time in the last two years, or if you buy at any time in
the next year, ten years from now you are going to be sitting with a
negative real rate of return.
How do you like them apples? By the way, Dr. Stool has no intention of
making good on that guarantee. He just wants you to study the chart below
very closely.
The data is through year end 2000. A down year this year will turn those
blue and gold lines south, and that will be the final death knell. Ask not
for whom the bell tolls, it tolls for thee, Wall Street charlatans. OK, so
Dr. Stool is anticipating (and maybe dramatizing) a little.
The point is, over the last 10 years we've bought our way to the most long
term overbought market in the history of the world. WHO THE HELL ARE WE
GOING TO SELL THIS CRAP TO, our kids? No way, the next generation will learn
to hate stocks, just like Dr. Stool's generation did in the 1970s. Relative
to inflation, stocks had negative real rates of appreciation over each ten
year period beginning in 1958 and ending in 1968 through 1986. In other
words, if you bought in 1958, you lost. Fifty-nine, same, 60, 61, 62 etc.
etc. The first year you could have bought stocks and enjoyed a positive 10
year appreciation rate after inflation was 1977. Now there's a helluv'an
argument for T-Bills. Just keep rolling them over and you'll do just fine.
Obviously, since this is year end data only, there were some times during
those years when prices were weak, when you could have bought and done all
right, like the 74 bottom. But on the whole, if you bought any time from the
late 1950s through the late 1970's, that's, lets see, twenty years(?), you
were toast.
This is the environment we are in now. Forget stocks. Use every rally to get
out. These stocks are not coming back. It's over. Our generation has blown
it's wad. Party over. Stocks suck for the long haul.
Buy T-Bills, and  quit worrying. You'll start sleeping again.

addendum :
http://www.capitalstool.com/images/long-t1.gif
Chart Notes:  The hot pink line is the annual closing price of the Dow. The
gold line is the 10 year compound appreciation rate. The navy line is the 10
year real compound appreciation rate. It is equal to the 10 year
appreciation rate adjusted by the CPI change over the same period.
The left scale is the Dow Industrials on a logarithmic scale. The right
scale is the percentage change. Stocks are long term overbought when the
real 10 year compound appreciation rate equals or exceeds 11%.They are
oversold when the real 10 year compound rate of appreciation falls to
below -3%.
When stocks reach overbought levels, they have provided declining, or poor
returns for 20 years after reaching those levels. Stocks became overbought
in 1996. The chart suggests that if you bought stocks in 1996 or
subsequently, you are likely to see your investment turn negative and stay
negative until approximately 2016.