Vincent Fernando

Long Term Investing Appears to Have Gone Out of Fashion

from Paul H:
"You think the U.S. will disappear.

Which nation is so much better off?

China is expanding their fiat currency at a rate 10x faster than us.

Japan, the #2 economy, is having issues similar to us.

Just because a speculative bubble burst, you think the world's largest economy will just shut down?

Sure, we might not be able to live as large (although anybody with money to invest is doing okay here) on average, but life in the U.S. is still better than any place on Earth."

The US will continue to innovate and will become a stronger nation. People who think it's over misunderstand the US's most powerful feature- it's ability to change on a dime, adapt, and innovate. That innovation is still happening and always will as long as our silly government doesn't lock down the economy with rules. That's what got Japan stuck in the mud once institutions their calcified around the economy. China had a nice clean slate to work off of due to their very troubled past, but trust me they have their own problems which are much worse than the US and at some point their institutions might calcify as those in Japan did, or simply blow-up. I hope they manage them and become a prosperous nation with a high standard of living for the average man, but they will have to run past some pretty nasty economic and social land mines in the process.

The S&P 500 in Real Terms

Doctor No: if you want to know what the market valuation is today vs. previous points in time, then you do not include reinvested dividends. You only include reinvested dividends if you wish to calculate the performance, as in % returns, over a period.

Prudent Man: I respect you opinion, but for me rolling T-Bills is a pretty bad proposition over the long term given inflation, incentives for the US to follow dollar-weakening policies, and current yields available.

Dean: Thanks. Actually I am not arguing hard for a overvalued or undervalued S&P. I actually feel its likely undervalued if pressed to answer, but this post was simply to see a long term S&P chart in real terms. Thanks for the link.

Fredissy: Stocks are inherently inflation-adjusting given that they are claims on companies, which are basically just assets that one can value with any currency, which should be able to increase prices with inflation in general. (If the dollar halves, the dollar price of a Coke will be double) Of course this doesn't necessarily work in the short term, or for some stocks. But the S&P overall should be inflation-adjust.