John Lounsbury

Economic Outlook: Is It Safe?

As always, Mr. Quinn, you have written a brilliant analytical piece.

I have three points to moderate the overall pessimism of your article:

1. It is true that there was a period of 25 years to regain the 1229 index highs. However, the average dividend during that time period was much greater than inflation and interest rates. Therefore, stocks were the best investment during that period, even if you bought at the 1929 high.

2. There were 13 primary bull markets during that time period and the three largest had gains of more than 100%, with a fourth gaining over 93%. Of course there were also 13 bear markets. However, investors who used prudent risk mangement strategies during these 25 years made handsome capital gains, even if they were fully invested at the market top on September 3, 1929. Buy and hold would have made 5-6% per year (average) income from dividends, but much greater capital gains were available for the prudent investor.

3. I believe we have the opportunity to build a new, sustainable growth economy over the next 10-20 years, based on infrastucture and energy technology development that will create a new productivity boom.