mannfm11 wrote:Freddy, I don't believe Warren Buffets career has spanned much blood in the streets And Buffet didn't coin that phrase, as I am sure it has been around at least since the panic of 1907. The S&P 500 pays a dividend not much over 3% and the payout is falling every week. The history of holding stock from the point the dividend fell to 3% hasn't been too good. The prior peaks valuations that amounted to a 3% dividend were 1929 and 1966. We reached 1% this time. You must realize that when the SPX was 1500 in 2000, it was worth at peak around 500 to 600 and history promised a good chance for 15 years to come to buy it in that price range. The 1990's mess in Japan wasn't this bad, yet our stock market represents only about 1/2 the damage of Japan so far. Buffet is going to be impaired before this one is over because he is investing the float out of an insurer and any kind of bad year in claims together with poor equity performance will blow the lid off Berkshire. Then there will be blood in the streets and he will be fully invested at a factor of 2.
I basically agree with everything you're saying but I also know that being married too tightly to an expectation or idealogy is not a good investing strategy. Warren Buffet is not a foolish man but like everyone, including you and I, he will be wrong now and then. I think we have significantly farther to fall but I expect the stock market to make some of its best gains before the depression is over.
I am using The Great Depression as a worst case scenario and trying to invest in a manner that will make me money or at least preserve my capital in most any scenario. I am simply not interested in trying to specifically divine the course of the next ten years because that will distract me from properly navigating the next year. I will settle for being realistic about the next ten years and being as dead on as I have been in the past year or two.
I believe it's possible that we may be at the end of our dynasty but I also know that it has looked that way before. In the 1930's we were a depressed nation afraid ro address the growing threats from overseas and yet we rose to that occaision and I fully expect the American people to rise up, when the time comes, and once again prosper and do what is required to ensure our liberty and our prosperity.
Hard times are predestined because of the leverage already in the system but what you can not yet measure is how hard people like me are working to ensure that we do not end up broke and living on the streets. That is the unknowable future and that many of us have accepted that we are in a depression for some time now is a positive factor for our future.
I predict Dow 5,000 or lower in 2009 with a further drop likely into 2010 but I will reasses my views at that point but I would expect a drop down into the 3000's, at least, but I will not be afraid to reasses as needed.