The Dow Jones Industrial Average has just hit 10,000, which is where it was a decade ago. Likewise, I predict housing prices will be at roughly today's level a decade from now, although the Democratically-controlled Congress seems intent on having another housing bubble in the interim.
Things don't look quite so rosy for the S&P 500—a better measure of the stock market—which is
below its October 1999 level:
But don't worry. Some things
have kept going up over the past decade. For example, the
national debt:
- $5.656 trillion in 1999
- $11.909 trillion in 2009
Things don't look quite so rosy for the S&P 500—a better measure of the stock market—which is below its October 1999 level:
But don't worry. Some things have kept going up over the past decade. For example, the national debt:
Posts
You may be right to say that price level of all kinds, including stock and housing may remain exactly the same as today in a decade. But you forgot one important factor: inflation. With an almost sure outcome of higher than normal inflation during the next 10 years, although inflation-adjusted pricing may remain the same as today, actual price point will go up exponentially with a high inflation rate.
ReplyDeleteMy point is simple, if you don't invest, your money's buying power will diminish at an accelerated rate over time.
Inflation will bring higher interest rates putting pressure on housing prices. James' forecast should be fairly accurate given the tighter credit standards and damaged demand. The statement that by not investing, your money's buying power diminishes only holds true if the return on your investment is higher than inflation. Tell that to the millions of people who invested in S&P 500 mutual funds and are right where they started a decade ago. They have suffered negative "buying power." Relying on axioms in this new world of exotic investments will only serve your broker. Be careful son!
ReplyDeleteUntil the pain of change is greater than the change itself, nothing will change..... The U.S. has to stop wasting money on worthless bailouts and let the free market work.
ReplyDeleteAnonymous said...
ReplyDelete"You may be right to say that price level of all kinds, including stock and housing may remain exactly the same as today in a decade. But you forgot one important factor: inflation."
A clarification, I am only predicting that housing prices will be stagnant over the next decade, not stocks. I am saying that the coming decade for housing will be like the past decade for stocks.
thre was a good post on http://www.forecastfortomorrow.com/news
ReplyDeleteyesterday on this.
dont worry the bubble will pop very soon.
Sometimes I feel like everybody treats the market as such an abstract impersonal concept… and it is in a sense. It represents the supply and demand of money free for investing I suppose. But what about the pure heart of it - at the core of the stock market isn’t it just someone giving someone else money to do something with it in return for a portion of the hoped for profit?
ReplyDeleteDo you mean that, house price would rise to certain level, then gend down, in next decade?
ReplyDeleteSay medium price is $160k now, it would be $220k in 2015, then 2020 back to $160k?