Investing the Next Decade
The stock market gyrated sideways again. Just when investors seem ready to jump in again, the Irish debt problems pop out with fears of contagion across Europe.
Is this symptomatic of what represents a Lost Decade for investors? Those who got scalded, burnt or roasted by the market volatility, especially the past few years 07-09, vowed never to touch stocks ever. But probably flock to real estate. Read this Reuters special report on investing. The article talks about US investors spooked by the markets and how this might inevitably lead them to commit the mistake of 'abandoning the market in times of uncertainty is exactly the opposite of what investors should do'.
By examining historical stock chart of the Dow Jones (see below), one can spot periods of bull & bear markets by the years. Though the chart stops at 2002, it almost seems this Lost Decade (2000-10) marks a pause in the market's ascent.
Certainly, even if I'm preparing for retirement 5 years from now, I still need to generate a positive inflation-adjusted return on my monies. It's not difficult to see that the primary drivers of future growth in the next decade will come from the rise of the Asian consumer, the rapid urbanization of populations and the proliferation of smart devices influencing our everyday lives. There are plenty of companies who will stand to benefit and participate in this growth story. It's time to get our investment portfolio positioned forward.
DJI 1920-2002 (log graph)
