
I’m Still Going Long and Hoping the Markets Go Down - Anon84
http://blogmaverick.com/2008/10/10/im-still-going-long-and-hoping-the-markets-go-down/
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davidw
[http://economix.blogs.nytimes.com/2008/10/10/how-long-
before...](http://economix.blogs.nytimes.com/2008/10/10/how-long-before-the-
market-bottoms/)

> Some may also wonder how long it will take the market to “recover.” It
> depends exactly what is meant by “recover,” of course, but one measure might
> be when the market returns to its pre-crash peak. The historical data is
> somewhat more distressing in this context.

> After the Great Depression, it took 29 years — until 1958 — for the market
> to reach its pre-Depression, inflation-adjusted peak. After the 1970s
> recession, it took 24 years — until 1992 — for the market to make a full
> “recovery” by the same measure. So no matter whether you start from the
> recent 2007 peak, or from the market’s absolute inflation-adjusted peak
> during the tech bubble in 2000, we may still have at least a decade to go
> before full “recovery.”

Although of course some of that time will be 'going back up', so won't be so
bad. it's not like 74-92 were all bleak and tough, difficult years.

~~~
astine
Well, the Great Depression had both the New Deal and the WWII to suffer
through. Even if you support the former, you still have to admit that the
later was a downer.

Hopefully, we won't have to worry about either of those for time being.

~~~
mattmaroon
I think you've got your history wrong. WWII was what ended the Great
Depression. From Wikipedia:

"The end of the depression in the U.S. is associated with the onset of the war
economy of World War II, beginning around 1939."

Also from War Economy entry:

"On the supply side, it has been observed that wars sometimes have the effect
of accelerating progress of technology to such an extent that an economy is
greatly strengthened after the war, especially if it has avoided the war-
related destruction. This was the case, for example, with the United States in
World War I and World War II."

It didn't suffer through it at all, it got fixed by it.

~~~
mynameishere
WWII ended the depression if you define "the depression" by its characteristic
unemployment levels. In terms of quality-of-life, WWII was much...
_much_...worse than the depression. Rationing, regimentation, agit-prop, scam
war bonds, not to mention having to march off to war...all worse than the
depression by far.

The notion that WWII fixed the depression is the "broken window" theory writ
on a grand scale.

<http://en.wikipedia.org/wiki/Parable_of_the_broken_window>

~~~
mattmaroon
Well, I'd say that whether or not life during WWII might was worse than during
the depression is a very complex question, and you'd get very different
answers from different people at the time. It was clearly a lot better for
some, a lot worse for some, etc.

Even if it was worse overall, it gave us an economy and nation afterward that
was far better than before the Great Depression. It is, of course, impossible
to say where we'd be without it today, but things like the GI Bill greatly
educating the American workforce or women entering it significantly
undoubtedly changed us for the better.

The ramifications of that war are so complex that we're still finding new
ones, but I was just pointing out that it is generally considered the end of
the Depression, and much of the reason for our following prosperity.

~~~
TheWama
The fallacy is that you don't know, can't know, what our economy would have
been after that period, absent WWII. What if we were on the cusp of recovery
anyway and we had spent 5 years building railroad and machinery rather than
tanks and bombs? The end result would have been a more efficient application
of industry over time, resulting in a more abundant society, right?

But I can't say that was the case, would have been the case, any more than you
can say the opposite, because we don't know what would have happened if we had
tweaked x or y, and can't test it. That's why economics is a social science,
not a science. That's why economists are still arguing over what caused the
great depression, as well as what ended it.

~~~
mattmaroon
It's not a fallacy because I specifically pointed that out. You can, however,
point to all of the various technologies and cultural shifts that impacted our
economy, and the 50+ year period of unrivaled prosperity that occurred
afterward and say it most likely was for the best.

Very few nations ever achieve a period like America did from that point to
probably about 9/11/01. If we had to make the decision again from a purely
economic standpoint, given the benefit of hindsight, we'd make it the same
way.

~~~
TheWama
You did state rather unequivocally that WWII fixed the economy:

> It didn't suffer through it at all, it got fixed by it.

And now, you're attempting to declare post hoc, ergo propter hoc? The whole
point of what I'm saying is that there are thousands or millions of changes in
policy, technology, demographics, sentiment, which had an impact on the
economy, we don't know which did what.

I could just as easily explain the post-war years by saying that it's natural
that any country which does not get bombed to smithereens will experience
relative prosperity, whether or not it participated in bombing other
countries, as we did in WWII. Perhaps it was only that advantage which
overwhelmed the tax of war spending.

Again, I can't say for sure, but neither can you. I'm inclined to think you're
wrong though, from the simple perspective the the allocation of resources over
time.

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timcederman
I hate being such a sook about the markets. I want to sell now and buy when
it's lower, but I'm worried we're at bottom.

That said, I thought we'd hit bottom yesterday. And the day before that. And
the day before that.

~~~
steveplace
If you didn't have a risk management plan in place, for shame.

Anyways, here's some stuff that will take the fear out of you.

[http://bigpicture.typepad.com/comments/2008/10/10-bullish-
si...](http://bigpicture.typepad.com/comments/2008/10/10-bullish-sign.html)

~~~
timcederman
I have risk management in place, of course. I'm not concerned about my losses,
just wish I had the balls to capitalize on the falling market.

Good link, thanks. So perhaps time to start buying soon...

~~~
njharman
Balls?

I don't understand. The simplest tenant is "buy low, sell high". Most stocks
are low, way low now. No need to time the bottom. Buy and hold. Buy quality
companies whose business/products you personally understand.

If you already have stock, it's a nobrainer perfect time to buy more of the
same. Dollar cost averaging.

Bought a stock at $20, now it's at $15? buy another. Your cost is now $17.50.
Stock has to go up half as far for you to be making return.

~~~
timcederman
Yes yes, buy and hold, blah blah. But you're missing the sell part. Monday was
when I should've sold high, but I don't want to mistime the bottom, so I do
the lazy investor's approach and leave my stocks alone until a bottom has been
established and I start buying back in.

------
maurycy
Good entrepreneur does not necessarily means a good investor.

~~~
mattmaroon
He did run and sell a successful hedge fund.

------
Eliezer
You are all missing the key point of Mark's whole reasoning. DON'T BUY STOCKS
BECAUSE SOMEONE ELSE WILL BUY THEM. BUY STOCKS _YOU WANT_ TO OWN, forever if
need be. Why? Because they pay dividends! Mark doesn't care if the Dow goes to
zero or infinity, he's got an acceptable yield on his stocks and that's all
that matters.

~~~
mleonhard
There are some stocks that don't pay any dividends. :(

------
known
Current Share Price of the Company = 5 x Book value Per Share of the Company.

Current Market Capitalization of the Company = 10 x Quarterly Revenue/Sales of
the Company.

Anything beyond is either irrational or manipulation.

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DanielBMarkham
It's a great time to buy.

I haven't been in the market for a couple years, but I'm salivating over this
downturn. Sorry for all those losing money, but in my opinion this is a buying
opportunity like there never was before.

~~~
kingkongrevenge
The markets will probably bounce in the next week or two, so there's a trading
opportunity, but the historical record says you're a fool if you buy to hold
now. Ignoring that stocks probably have more to fall, the behavior of falling
markets is that they bottom and then stay at the bottom for a long time.
Things trade sideways for a long time before any secular bull kicks off. You
do not have to worry about missing the boat.

~~~
nandemo
You do have to worry about missing the boat. Historically, there are a few
days in the year for which the daily return is huge, say 4 or 5%. You cannot
guess in advance. If you miss a couple of very good days, your return might be
much lower than the market's.

~~~
kingkongrevenge
In a secular bear the annual return is probably negative. By miss the boat, I
mean miss the start of a secular bull. We were talking about buy and hold
investors.

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furiouslol
Long agricultural commodities Short equities

