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  • "The market can remain irrational longer than you can remain solvent" - John Maynard Keynes

    Tuesday, April 15, 2003

    Peter Brimelow in this article updates some of the brilliant work undertaken by Jeremy Siegel in Stocks for the Long Run. A dollar invested in 1801 in the following vehicles is now worth;
    Stocks $462,502
    Bonds $1,070
    Gold $1.19
    Cash $0.07
    In 1801 dollars; or $6.96 Million in today's dollars!! That is 7% per year.

    We have seen roughly 15 fold inflation in that time.

    Anyone that says "Buy and Hold" is dead simply has rocks in their head. Rest assured that no institution can claim 7% per year over 200 years. Note also how gold has been a value store, $1 in 1801 = $1 today (in 1801 terms). The regression line showing 7% growth was exceeded by the S&P for much of the 90's and we have only just fallen below the line. Still the Speculators identify sound statistical methods showing that we should have an up year this year (and that we should have had one last year too!). I feel somewhat bad for those poor folks who have moved their money into Bonds and Bills, though the outward funds flow has given me some great opportunities to buy some undervalued stocks, I guess I'm more thankful than sorry :).
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    Disclaimer and Disclosure Analyses are prepared from sources and data believed to be reliable, but no representation is made as to their accuracy or completeness. I am not paid by covered companies. Strategies or ideas are presented for informational purposes and should not be used as a basis for any financial decisions.
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