(originally written May 8, 2012. Part of my “Great Upload of 2013”)
There was a great article in the Globe & Mail investment section about one John Maudlin’s predictions that after the stock market moves down for awhile, it will move up. Which, I’m sure you’ll agree, is brilliant stuff — blindingly insightful. Worth every penny! (Mainly because his online newsletter is free. :) )
Alas, as much as I’d like to skewer his ideas, there’s a maddeningly good chance that he’ll be right. If stocks actually start rising “for good” five years from now, there will have been a 17-year period where the stock indexes stayed flat, finishing at roughly the level where they started (2000-2017). This was preceded by an 18-year period where stocks kept moving up (1982-2000) which was itself preceded by a 16-year period of relative flatness (1966-1982) which was preceded by a 17-year period… well, you get the picture: tide goes in, tide goes out.*
With this kind of self-reinforcing 17-year cycle, you would think the stock market’s mascot would be a cicada. But no, they inexplicably chose a bull and a bear; about the only thing they have in common, is tapeworms.
I’d imagine the two aforementioned predictions will interrelate, because bad times float gold’s boat, while in good times it drops like the rock it is. (And that generally means platinum gets cheaper, so yay, fuel cells!) Dr. Evil above foresees ongoing misery pushing gold upwards, and Mr. M sees it keeping stocks down. But whenever we go through the looking glass to prosperous times, gold is likely to lose its allure. So I plan to be decidedly dismissive towards the stuff from roughly 2017 to, let’s see… 2034. ;)
Good times ’til the mid-twenty-thirties would be nice for guys like me, who would be pushing sixty; it would imply that our retirement savings could be in reasonably good shape — even if the retirement age will be something like 80 by then. :) (I wonder how long until London Life changes its product name to “Freedom 65”?) Of course, this all depends on one’s being in the position of being able to save money, something that commentators often forget, because that’s generally not their problem.
Upon achieving crotchety old geezerdom, I for one am particularly looking forward to regaling young-folk with boring stories about how much better things were when I was young — once you factor out the lesser technology, widespread poverty, appalling injustice and environmental wreckage. ;)
Of course, I’ll want to emphasize how much tougher we were as kids. For example, we attended seismically unsound schools: the Vancouver School Board recently announced plans to raze my earthquake-vulnerable elementary-school alma mater, L’Ecole Bilingue, and replace it with something a bit less crumbly. Of course, having been built long before bilingualism — back in 1912, when BC was led by Premier Dick McBride (seriously) — for the first few decades it went by its maiden name, “Cecil Rhodes School”.
* there’s nothing magical about 17 years, except for the fact that since it’s happened a few times before, enough people are likely to expect it to happen again, causing a self-reinforcing cycle. More mundanely, if the stock market is still at current levels five years from now, dividends and profits are likely to be attractive enough that “value investor” types come out of hibernation and shovel gobs of money into stocks, eventually driving them upwards. :)