When browsing through investing forums, you can feel the angst amongst the participants. After the precipitous drops of 2008 and early 2009, people are in general uneasy about the rebound.
My liquid investment portfolio (previously 85/15 now rebalanced to 65/35) shows the following annualized return percentages:
- 2008 -32.8%
- 2009-2010 +47.7%
- Total Return: -0.7%
If I had not put any money in or did any rebalancing, I would be back at my 1/1/2008 values. However, since I aggressively did both during the market nadirs, my dollar returns look like the following:
- 2008 -35.6%
- 2009-2010: +56%
- Total Return: +20.4%
However, while investors who stayed the course have seen their portfolios come back, the general economy is still suffering with high unemployment and housing boat anchors. Combined with the fast rebound, putting money in now feels like getting back in at bubble heights. But if not domestic stocks, then where? Bank accounts and money markets are paying no interest. European stocks with their debt situation? Emerging markets after their hot run-up? Bond prices are through the roof with inflation-linked bonds selling at negative rates. Gold is at all time nominal highs and commodities have reversed course (up) even faster than stocks. The housing market is even more fraught with peril with shadow inventory, foreclosure brouhaha and pending interest rate increases to drive prices down. Basically, *everything* seems to be in a bubble to the average investor and inevitably will drop the moment money is invested.
Or perhaps not if we look at this from a different angle? If everything looks to be over-priced (except for crappy houses), maybe it's our currency is has been devalued (or the expected devaluation is priced in). With every country in this world desparate to devalue their currency in order to increase exports, it is no surprise that every investment appears to be rocketing into the stratosphere. After all, Zimbabwe's stock market returned a billion % to match their currency's devaluation.
(Filed in investing)
Just 2 weeks ago, I mentioned about the fear amongst common investors. To be honest, there's always fear -- just the words people use are different. You continually run into "financial porn" telling you something bad is about to happen... Read More
(Fill in asset class) is over-priced
Posted by Mossy
November 4, 2010 8:22 AM
My liquid investment portfolio (previously 85/15 now rebalanced to 65/35) shows the following annualized return percentages:
- 2008 -32.8%
- 2009-2010 +47.7%
- Total Return: -0.7%
If I had not put any money in or did any rebalancing, I would be back at my 1/1/2008 values. However, since I aggressively did both during the market nadirs, my dollar returns look like the following:- 2008 -35.6%
- 2009-2010: +56%
- Total Return: +20.4%
However, while investors who stayed the course have seen their portfolios come back, the general economy is still suffering with high unemployment and housing boat anchors. Combined with the fast rebound, putting money in now feels like getting back in at bubble heights. But if not domestic stocks, then where? Bank accounts and money markets are paying no interest. European stocks with their debt situation? Emerging markets after their hot run-up? Bond prices are through the roof with inflation-linked bonds selling at negative rates. Gold is at all time nominal highs and commodities have reversed course (up) even faster than stocks. The housing market is even more fraught with peril with shadow inventory, foreclosure brouhaha and pending interest rate increases to drive prices down. Basically, *everything* seems to be in a bubble to the average investor and inevitably will drop the moment money is invested.Or perhaps not if we look at this from a different angle? If everything looks to be over-priced (except for crappy houses), maybe it's our currency is has been devalued (or the expected devaluation is priced in). With every country in this world desparate to devalue their currency in order to increase exports, it is no surprise that every investment appears to be rocketing into the stratosphere. After all, Zimbabwe's stock market returned a billion % to match their currency's devaluation.
(Filed in investing)
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Just 2 weeks ago, I mentioned about the fear amongst common investors. To be honest, there's always fear -- just the words people use are different. You continually run into "financial porn" telling you something bad is about to happen... Read More
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