Lost Decade Ahead Is OUR BEST Life Investing Opportunity!!

A lost decade ahead is the best investing opportunity one can dream of.

Goodfl investors we recently discussed how long can this bear market last and there we have had stanley dragon miller’s case how the dow won’t be much higher in 10 years than it is today and there were a lot of comments a little bit frightened about what does it look like to have stocks go nowhere for 10 years it has happened in the past let’s discuss because i

Really see it as an opportunity and if you think investing when stocks are lower is an opportunity smash that like button or inflate it to be more in the current situation and subscribe if you haven’t the first thing to understand is that we have lived in a 40-year bull market the greatest bull market in history and just for the sap 5 hundred so if we look at this

Chart 40 year chart the s p 500 level was 133 now it is 3669 as i’m preparing this so this is what 25 30x in 40 years plus dividends let’s say 40x or more and that is an incredible bull market yes this was two years of decline not even two years three weeks of a significant decline and now we are a few months 25 down but still the biggest bull market in history

Is there this is of course obviously because interest rates since 1982 don’t worry everything is correlated went nothing but down and now only in the last few months have we seen this spiking interest rates that has crashed already the market 25 everything when it comes to investing is of interest rates and this was a hurricane not a tailwind a hurricane pushing

Stocks higher further when interest rates could not go lower than central banks decided let’s print the hell out and push financial assets higher higher and higher and that has been the case for the last 40 years but especially for the rest decade when stocks went up for five times from the bottom in 2009 that is insane that is something that will happen likely only

Once in a century so it is time to think okay what if things return a little bit to the normal historical normal how to invest it is not uncommon that stocks go absolutely nowhere for a decade or even more in the 2000s we had a 12-year period of nothing in the 60s 70s 17 years of nothing earlier 25 years of nothing and 22 years of nothing the beginning of the last

Century of course here here and here you had something that changes everything which were dividends but now with the current dividend yield at 1.7 percent for the sap 500 it is a big big difference between going nowhere now for 10 years and going nowhere for 17 or 20 years back in the past and we have seen these stocks going up for 40 years because interest rates

Went down that is simple correlation however we must also understand here the difference between real returns and nominal returns this is yes 17 years of nothing but let me show you something if we take look at this chart the sap 500 for the last 90 years adjusted for inflation so here 1968 the level was 908 points this is again adjusted for inflation a few years

Later or better to say 15 years later the index was at 325 points that is a 60 70 percent decline in 15 years in real terms so those who held an index back then lost 70 percent of their purchasing power by holding stocks over 14 years and it only recovered this is 900 points it only recovered inflation adjusted in 1992. so 25 years of nothing similarly from the.com

Bubble 2500 inflation adjusted again it recovered only 15 years later so we have had this amazing bull run and it is very very probable that inflation adjusted the sap 500 does not hit the current level for the next 15 years of course if we delete the inflation adjusted then we have it here everything looks beautiful stocks only go up except for 25 years here 70

Years here and 12 years here but that is a long long period and plus you look at these declines there are 40 50 declines in the meantime that make it very very difficult to invest so it is very very possible that over the next decade or two stocks at least in real terms go nowhere and when it comes to investing ahead in dragon miller said and you can’t make money

But you can have a period of 15 20 10 years where the market doesn’t go anywhere that doesn’t mean you can’t make money you could have made plenty of money in the 70s we had two sixty percent rallies so there will be plenty of opportunities but we have to think about how to take advantage of those opportunities we already explained the difference between nominal

Returns so if the market is flat for the next 10 years but inflation is 10 per year that means that we have lost seventy percent of the purchasing power we had even if it is flat and that’s something to always keep in mind that we have to invest in businesses that will do good no matter the environment warren buffett says best businesses out there but then again

With lower financial assets finally after we can say four decades of an environment created for gamblers finally it will be the time will be ours we are back to real investing dividends yields cash flows reinvested good returns on capital employed capital invested and that’s the core of investing going forward and if you like that attitude we will discuss that

More we will be the ones buying when everyone else has capitulated for that smash that like button subscribe and here you have a dividend video that explains how dividend sense are the core factor for investment returns not the fed not anything else dividends and inflation give everything when it comes to our wealth accumulation so it’s a great video to continue

On this topic thanks for watching i’ll see you in the next video

Transcribed from video
Lost Decade Ahead Is OUR BEST Life Investing Opportunity!! By Value Investing with Sven Carlin Ph.D.