My wife and I like to think of ourselves as being bullish on the
stock market. Certainly, we have a portfolio of mutual funds--mostly
aggressive growth--to support this opinion. Even so, after watching
"Frontline," we could not avoid feeling (which I think
"Frontline" had as one of its goals, perhaps) the stock
market may be headed for another long-term recession (or worse,
God forbid). In
light of this notion, what investment is immune to a crash? Is
there any? For instance, immediately after the crash of 1929,
was any investment "bulletproof?" Restated, did any
investor in the market in 1929 make money? On a broader scale,
can the assertion not be made that if we have another crash and
of the magnitude of that caused by the 1929 crash, aren't we all
pretty much toast, regardless of where our money is? If I am
wrong, please enlighten me, because my wife and I have been struggling
over this issue for some time.
Holloman AFB, NM
First Message sent without the "message." Here goes!
Why are the respondants to your survey undoubtedly going to be
full of wisdom and say (predictably) "bearish short term
and bullish long term" while simultaneously they are the
same ones putting every dollar of disposible income from the economy
into the stock market?
Greed. They do not know what fear truly is, and think that they
will have the intelligence, savvy, and timing to get out of the
way when prices slump. But they all think alike, and all will
want to sell simultaneously, the same way they are trying to all
buy at the same time. There is saying about the markets-"It
takes buying to send a market up, but it falls of its own weight."
Well, there are a lot
of people out there who are weighted pretty heavily in equities
right now People think July.'96 or Fall '91 was a bear market.
"You buy the dip, they all say knowingly." The real
bear market that takes earnings multiples to more sane levels
will be brought on by an exogenous event that you es just as well
as anything else, and I'll let you be the judge of where we are
at this moment.
Aside from the fact that I am neither a fan of the bulls, nor
the bears, but the packers I am in the market for the next 20
to 30 years. I keep at least 30% cash at any one time, and if
the market goes down, I hope that I have the presence of mind
to buy, not sell.
Milwaukee, Wisconsin (home of the Packers)
Time watching was well spent. Informative. Did a lot for my
self confidence i.e. my expectations and methods of stock
selection are sound for my circumstances. I will probably
never be filthy rich but I will be independent.
The big risk in the market is with smaller companies that could
go out of business. The larger companies,Gillette, Mobil, etc
that are international will always be around and have a book value
that supports their valuation. The risk with an under capitalized
company is that they can go out of business and as a stockholder
you loss everything.
The market will reach 7200 sometime in 1997. It will not
go any higher. I think there will be a few corrections that
will keep the market from giving us the dazzling year-end
gain of 1996.
Yes, the market is up - I've made money as has virtually everyone.
But, I remember
1987 and, fortunately, the 1970s. There are a lot of people -
investors and mutual
fund managers - who don't remember either and won't have the stomach
for the inevitable. The end of the world isn't coming BUT it
might look that way for a while.
St. Louis, MO
Yes I belive that the stock market is safe your the short and
long term. For the main reason that today's business is quite
often looking to the stock markets to fund their futures.
Grand Falls, New Brunswick
Bear. It seems odd to me that the currency to buy other company's,
and the favor of employees is through inflated stock and stock
options. What will happen to this currency when prices decrease,
even if temporarily? Surely for employees, the demand for hard
dollar wagesssss, which could cause greater inflation if the economy
is at full employment.
Enjoyed the show,
I am the publisher of the web site
with the "Famous Bear Markets" referenced in the Frontline
I found the various articles very
interesting. In particular Jim Jubak's and Diane Henriques' comments
regarding the next bear market are insightful. Like them, I believe
that the next bear market will be a dragged out affair. It will
take a long time for all the "buy the dips" fans to
be beaten down. Eventually there will be no
one left buying the dips. And that
will be the end of the bear market.
Lest anyone think we are super bears,
our current posture is bullish. Ever vigilant, but bullish. We
do not make predictions, simply follow the market. It will tell
us when to get out.
Finally, for those of you who are
not in a doom and gloom mood, you can also find some charts of
long term BULL markets at our site. You can find them by following
the link to "Famous Bear Markets" found on the "Bear
Market Musings" page.
Enjoyed what I hope will be a thought-provoking
There are too many who say that "this
time it will be different"
and do not listen to the "wise
men" who have been there and had the experience of a market
that do not always go up and up. I think the
lesson from Japan is not heeded as
much as it should be.
I thoroughly enjoyed the show. As
an investor it was humorous to see just how really out of hand
things have become. Yes, it is important to invest for the future
and getting the highest return is the fastest way of obtaining
wealth. However, I must agree that over speculation such as was
seen with IOMEGA is the exception rather than the rule. Overall,
investing in stable companies with good balance sheets and healthy
futures is the way to overall success.
But, investing it all in the market
would be a serious mistake. As the Federal Government plays ping
pong with Social Security, I too must look towards myself for
my financial safety net. But new investors to the market also
have the benefit of time to recoup losses. If you're in you're
20s or 30s, invest agressively. 40s and 50s a more moderate approach
is in order.
You did fail to omit one topic, the
DOW is an average of a few companies, not all of them. When the
market goes down there are still performers that make a profit!
Just when the market goes up there are still losers.
With the amount of money coming into
the market via IRAs and 401Ks where else is it going to go? Banks
and other large financial institutions have not demonstrated their
ability to be trusted (Remember the S&L Fiasco?) with returning
a decent rate
on savings, while at the same time
they're raking in huge profits.
At the present time, Social Security
is headed for trouble. We've been hearing it for years, but now
the cloud is on the horizon. Congress has already discussed expansion
of IRAs and 401Ks to allow people to invest more and I applaud
it! I'd give my money to
a money manager any day than the
Federal Government for safe keeping.
As a stockbroker I have to believe
that stocks are the best place for people to save money for the
long term. Some stocks are over priced in my oppinion but not
all stocks. One needs to be a stock picker but with a longer time
line in mind. Social Security will not be available to most people
who have worked for a living in the future. How can we ask the
average worker in the future to finance Social Security for 10%
or more of their income and then ask them to finance Medicare
and Medicade for even more, plus pay taxes on anything they manage
It is time the polititions and the
non workers understand that the goose has been plucked clean.
There are not going to be enough haves to support the have nots.
I have the most basic knowledge of
the workings of the
stock market, I'm of an age (30 years)
where I want to
diversify my savings for retirement.
The feeling for me
has always been that you put "fun"
money into the market,
and expect to lose it or continue
to have slow growth with
conservative investment. The episode
on the market gave
me a better idea of the mentality
of people investing,
why they are investing, and why maybe
I should invest
with a different mindset.
Thank you for an informative program!
Most excellent reporting, of course,
Like so many times in my life, this
Boomer has been like a bug, splatted on the windsheild of reality
re our incredible generation. I am right with the group just getting
into the market via equity funds since 1993 and yes, with a severence
package to protect at that time. Since then, it has been a feeding
frenzy with the annual RRSP/401K installments. Your show left
the future just hanging as it does. I am an aggressive investor,
83% equities, primarily in main line funds with some high risk
exposure which earn decent yet conservative returns relative to
those high fliers. I do understand
its buy and stick well enough but
this whole bear market thing causes concern. As I see it, wealth
has to be backed up by substance. The substance has to come by
exporting our lifestyle to the developing world. In short, when
Russians get to the
point where they must have and can
afford the pastry toaster in insulated white, of course, the whole
process will be complete. Certainly, our governments are doing
their best to catalyse the spread of consumerism. The intriging
issue for me and perhaps a topic for future reasearch by your
excellent news teams is our generation itself. As I age and begin
to realize, these are my peers in power, in the White House, ect.,
I have to wonder if the generation has the capacity for long range
thinking. The aggressiveness of investors in your report is part
of a collective failure in empathy amoung the Boomers, I feel.
Folks are just so short sighted, into their MacDonald's-have it
now mentality that there is not a sense of collectivity, everyone
being interdependent or even having a purpose beyond looking after
themselves. The whole downsizing thing, the sloughing off of
entitlements, the been there, done that thing all seem to be part
of it all. There was a time when the generation seemed so focused
and into giving peace a chance. I now suspect alot of that focus
came because they then lived in homes that had survived a great
war and since then, it has been one huge rolling mass mowing down
convention at everyturn but to what end. Your President Clinton
attempted to frame a future in the recent election and received
a fizzle for quite frankly his audience just did not have a space
in the DayTimer that week to pay attention. Sorry to have ran
on but at least you can take satisfaction in knowing yet again,
that PBS inspires thought as well as it informs.
Thank you for a fascinating story
on the stock market and at the many ways Americans attempt to
get ahead in life. Unfortunately, your negative slant has fueled
more fear rather than caution to the average investor, whose experience
with the markets are usually flush with "expert advice"
from their barber, buddy at work, the bartender,or the television
tube... You are right to affirm caution; not about the markets,
but at the attitudes of novices on playing a market rather than
I want to point out that there will
always be someone that will predict doom and gloom, regardless
of whether the market is up or going down. But the facts remain:
in January 1995 the Dow was at 3908, and people were being cautious
of it breaking 4000. Many people got out of the market, only to
find out, two years later, that it broke 6700. I researched,
and made money.
What's the lesson? It is that you
can never go wrong by being a "bull" if you have a long-term
horizon and you stick with the fundamentals. Iomega(featured
in your story) is actually a good company if you looked at it
as a growing company : the products, the potential earnings, the
target markets, the industry, the management, etc. Even when
the stock fell after the Motley Fool hysteria, you still would
have made money if you bought it at $2 and sold it at $28. Hype
is never a solid asset. Even Deion Sanders can't be a great player
if he doesn't have the skills, despite the hype... That is why
I would never listen to "Fools", only to be entertained
by them. In some way I hope there is a short-term correction.
Then it would drive out those wannabe players, who are driven
not by their brains and common sense, but by the ultimate: greed.
Thanks again for your most interesting
and provocative piece.
Winnipeg, Manitoba , Canada
Half way through the program, I realized
I was watching
myself with regard to my own thoughts
and instincts on the
market. Too many Americans feel
that if they are not in
the market, they are missing the
boat. Simple conserviative
participation turns to more risky
investing. We look for
the quick "pops" and with
the speed of the internet, start
watching our portfolios not just
on a daily basis, but on
an hourly one. I have my entire
financial future invested
in Stocks including my 401K. We gloss
over the fact that
the tide of the market cannot last
for ever. When you ask
whether were having fun, try posing
the question next week
or in five years .... when the market
Good show mate. I'm a relatively new investor (5 years at age 32) and I think your show was excellent. Many people in the market today have only seen the bull. I'm happy you stated the obvious. This recent wonderful market is just a blip in history. People shouldn't think that this is the way it works in the long run. John and Jane Doe's money will dry up, the market will slow and managers will take the
profits and run. Then the reaction by everyone else will ensue and bam, a bear. That may be over simplfied, but what makes other new investors, like myself, think "the '90s" is the decade that tames the market into enriching us without the risk that it has historically exhibited. It sounded like people were being very foolish with their life savings and trying to speculate rather than invest. I believe the market is overvalued and when history repeats itself, many "investors" will wish they did their homework.
I think it's a little on the foolish side to put all of one's money into the market thinking that it will just keep going straight up. If you ride it up, how for are you going to ride it down? Can you stand to loose 25% or more? Somme say you invest for the long term,true,but that long term could be just getting back to the point at which you entered the market. This thing will come down, how hard and how fast, your guess is as good as mine. I'm in this market but I've made sure I've got some cash.I read your Email and I feel a little better knowing that many of the people out there feel like I do. A great show. I'll stay in this market but I will not take any shortcuts to get to the top.
Steven C. Douglas
How many years have I been watching PBS and Frontline? Well, an awful lot! Now, I must say that I've never seen
such focus on relevent events and phenomena as Frontline.
"Betting on the Market" is just that: betting.
I've done it, I've been there, and it's euphoria when
you're "gaining" money. Well, lets stop focussing on
the money mad, and start listening to the realists out here.
I mean, my grandfather lived through the Great Depression,
and he knew and acted like it to his dying day.
Neither banks nor markets were any secure place to keep his
money, at least not all in one place. Now, what have we got
today? I'd say, a lot of people who haven't had their
grandfathers and grandmothers telling them how they lost it
all in the Depression. Perhaps I can pass this along to
them instead, and, I hope you all believe me that the stock
market always has been and always will be a very risky
investment! You want to argue with that?-- and I don't have
a thing more to comment.
I would like to thank PBS/Frontline for a very informative show.
I truly believe that over the long term) equities are a very good investment. The problem I have with the attitudes of the current investor is that the "long term" is not the horizon of the current equity investor. Day-trading....Week-trading....etc. has taken a new meaning with the avg. public investor. The mutual fund/professional Inv. community is (by it's own creation) forced to measure it's performance daily/weekly/monthly/quarterly. This does not
correlate with a 20 or 30 year horizon that every bull talks about when a bear discusses the possibility of a 25%-30% correction. The bulls scream (We'll just buy the dips...everyone is saving for 15 years from now..etc. etc. etc.)
One Week: This is the time horizon of current investments. Forget IOMEGA and its crazy rise and crazy fall. Forget Computer Associates and its 20 point drop in one day. These are both companies that have strong product lines and are alligned well in the technologically driven future. The issue isn't the price graph of these equities. The REAL ISSUE IS:
Can these companies continue to grow earnings for the forseable future at the rates priced into the shares today. That is the fundamental issue that Peter Lynch or anyother Value investor would ask themselves before paying these levels. That is of course if a portfolio manager with a Value Investing approach could retain assets long enough in this competitive market for aggressive growth funds.
On the technical front one needs to look deeply into the belief that $ flows into 401-K's and IRA's are so huge (and of course will never end) The data on $ flows into the Equity Mutual Funds is easily available today. $ flows into Equities (via Pension Funds) was not so easily available in the past. It would be interesting to see how the public would perceive these flows if they were told every new dollar
today going into 401-K's or IRA would have been going to a Pension mgr. in the past. In other words the flows are AVERAGE not ABOVE AVERAGE. I'm not saying this is true, but what if we found out tomorrow that it was.
The reason for the growth of 401-k's was primarily because of the continuing trend AWAY from defined benefit pension plans by employers.(Not to mention the unfunded liability problem most had in the past recession 1991-1992 Remember GM?)
Now that I've babbled for twenty minutes, I think from a Macro-Economic view we're heading for trouble.
Robert M. Grillo
- Europe is trying to do the impossible (ERM) by 1999.
- They already have a cronic un-employment problem and a huge social safety-net program that they can't afford, and also won't give up either (sound familar US?)
- At the same time they are cutting gov't spending and raising taxes. This, by the way, is not the way most text books would teach to lower unemployment.
- Japan is in a Deflationary environment. The BOJ has been giving away FREE money for more than 2 years and still can't jump start the economy.
- I've been short S&P's since 680 and doubled down at 733...
So the answer we've all been waiting for is: the market will go down big the day
I cover my short.......RMG
Palm Beach Gardens, FL
Rapid growth of new era "this time its different" psychology to justify paying outrageously high prices for stocks signals that an historic top is being formed Short-term the path of least resistance is still up, but the ground for a truly horrendous bear market has been prepared. People counting on perpetual double-digit annual gains in stock prices to fund their retirement will soon have their hopes and
dreams dashed beyond repair. In contrast to stocks, sentiment towards gold as an investment is as negative as it has ever been. This suggests that a major bottom is being formed here. Gold will be a much better investments over the next few years than the vast majority ofcommon stocks.
George S. Cole
Jersy City, NJ
Stocks can be a good short and long term investment. For long term investing, one should consider stocks that have shown to be stable
over the years. For example, stocks such as AT&T, McDonalds, and Microsoft have proven to remain stable showing moderate gains during bull markets and very minor losses during bear markets. However, one important aspect to remember about these stocks is that they provide a low dividend. For the short term investor, one should look at penny stocks in companies which have a promising future. For example, one should look at offerings of new pharmecutical, laser, and biomedical research companies.
I first became interested in the market in the early 70's and made money in 3 stocks that I bought. The market was rebounding and I thought I could win forever. I have made and lost money over the years and still love the market. Now however, I buy mutual fund indexes and no longer shoot for the stars.
I am worried about all of the activity of the market, and
can't help think that life and the market go in cycles. Mostly
with no accuracy in forcasting bad times until they are upon
Thanks for you great show on the market. Look forward to more of your programs
San Antonio, FL
Your viewers should be advised that, historically, the return
for the next decade for stocks, from the current grossly-
overvalued values, projects to be a NEGATIVE 3.5%. Though I
cannot predict when the current mania will end, I know it
will end badly, just as it did in 1929 and 1968-69.
My real concern is not that stocks will crash as they did in
1987, with no lasting harm done. It is that they will crash
as they did in 1929, with the hopes and dreams of so many
people going down in flames that it sends the economy into a
sharp recession or depression. Ask the Japanese; they know
how this works (since 1989).
Sign me off as.... sold out MUCH too early, but my retirement
funds are safe.
For more info, see "http://nick.assumption.edu/" - my stock
market letter, FREE on the World Wide Web.
All though I, like most new investors who have flooded the market in the past decade, are not naive enough to believe that the good ride will run indefinitely, fail to see a viable out. In the day and age of
evaporating pensions, Darwinian employment practices and the inevitably insolvent social security system, I fail to see any alternatives. Until that day arrives, I'll continue to throw my money into a benevolent crap shoot, while standing on a house of cards, just like everyone else.
Long term I don't see how anyone can be anything but a bull.
Even when the "Boomers" start to sell years from now it will
be a scheduled incremental process. I never have understood
the "Great Bear Market" prediction by some experts. Which isn't
to say I don't believe it possible, I just don't expect it.
Five years ago I got a hot tip on a stock of a small biotech firm which was waiting for FDA approval for a new drug. Once the approval came, the stock would soar. I bought $1,600 (for me a lot of money) of stock at $49 a share. A week later it was at $59. Then the FDA delayed approval and the stock dropped into the 30s. When the drug was found to cause deaths in some French hospital patients the stock dropped to $8. It's climed back to the low 30s, but I doubt I'll ever get back my initial investment. This whole stock market mania reminds me of the super overheated Los Angeles real estate market of the late '80s (the one that still hasn't come back). Luckily for me, I stayed a renter.
Los Angeles CA
What this report failed to mention is that
investors can make enormous amounts of money in
prolonged bear markets. There are investment
instruments called stock index(i.e.OEX) put option
LEAPS, direct stock put options, short selling of
specific high P/E stocks, and even a small variety of
bear market funds. Some of my favorite bear market
funds are: Prudent Bear, Comstock Capital Value 'A',
Lindner Bulwark, Leuthold Asset Allocation, and Rydex
Ursa(for stock bear markets), and Rydex Juno (for
bond bear markets), and Robertson Stephens
Contranian. All seven of these funds, as well as the
strategies mentioned above will do EXTREMELY WELL in
a prolonged bear market.
No one should fear prolonged bear markets, they
should embrace them as oppotunities to put into place
a different strategy directly opposite to the one
they used in bull markets. It appears that 99.9999%
of those invested in mutual funds are unaware that
money(LOTS OF IT) can be made when a bear market
occurs. The folks at FRONTLINE totally missed the
mark on this point. The producer of this program
wanted a sensational fearful program to excite their
viewers, not a program to inform investors of bear
market alternative investments. Bull markets exist
because of too few bear investors are selling their
stocks, the opposite is true of bear markets they
exist when many former bulls are selling their
stocks, this is what makes a market. People find it
easy to invest in bull markets, why not in bear
markets as well. The only thing that changes is the
Also this report made no mention of investing
outside the US, which everyone should have in their
portfolio anyway(at least 25%), which can be
increased significantly during a bear market in the
US. There simply is nothing to fear except being out
of the market, be it a bull or bear. JUST CHANGE
YOUR STRATEGY TO FIT THE MARKET FORCES.
As for that woman who owns the carpet store that
has her entire life savings in only TWO STOCKS: this
is the exact kind of investor that should be scared
stiff by this kind of market or any kind of market
for that matter, not someone invested in a portfolio
of diversified stocks and/or funds for the long term.
Thomas J. Block
I think the bear is waking. However I thought that 2 years early it seems. That's when I got out of mutuals and into GICs at 8.5%. My main concern is how all these inexperienced, first time baby boom investors will react when they get a taste of real loses. I believe they'll want to get their money out as fast as they put it in. This will cause great suffering to those individuals already retired or in the
process of doing so. The fuse is burning and it's just a matter of how long it will take for the bomb to go off. This Frontline program confirmed what I felt 2 years ago.
Of course, this is what we wanted isn't it. We depend on business to provide goods, services and profits for the prosperity of our futures. I have always wondered about the something for nothing promises of hyper-growth vehicles be it gold, oil well redrilling, real estate, and now super-charged mutual funds. It seems to me that a conservative rate of growth in companies that are actually producing a product to create profits, vs. simply manipulating a market to create growth, is based in real capital. Speculation on manipulation makes me uneasy, when I see the money managers frenetically buying and selling a cautionary warning goes off in my mind, "You can't get something for nothing." I would like to invest in the
continuing growth and prosperity that good business can produce. I just hope that the speculators and manipulators don't ruin it for the rest of us.
With all the varying messages that we are all getting from
the "experts" in these financially uncertain times, I am having
difficulty in making a determination; I think that my head is
a bull, my stomach is a bear, but probably all the rest of
me is a pig. So many of us, John Q. Public types are being
forced into a position of having to rely on the markets and
the funds to try and keep our heads above water, while jobs,
pension plans and interest rates are heading for the toilet.
I can't help but wonder if we are all walking in the dark or
are we being herded?
I want to thank you for another great show.
I am a 35 year old self employed woman who has been investing in the market for several years, but I diversify, use a "pyramid" plan to allocate assets. Getting greedy is a big fear, but watching these people with such absolute expectations is frightening. I am so glad this perspective has pulled me back to see the "wild animal." I am
prepared for it to snap and bite, but I won't lose my life to it.
I am a bull. Not to sound corny, but I'm bullish on
America. I believe in our economic system, the marketplace,
and american companies to continue our prosperity. Overseas
also offers investment opportunuites. The major caveat is
that the politicians could screw it up - in Washington or
in the state legislators.
Pleasant Hill, CA
Everyone states that the market is in for a correction.
I just don't see a correction. Earnings are great,
inflation is under control, and money is flowing into
mutual funds at a record pace. I just started investing
in the market, so I am too young to ever see a bear market.
I think we are definately in a different stock market now.
That is not to say that stock market is a better or worse
investment, but with such an unprecedented number of people
invested in stocks, we will probably see the stock market
behave in an unprecedented manner (unprecedented highs?
unprecedented lows? more volatile? less volatile? who knows.)
The big problem for the investor is that if you look hard
enough you will always find a "professional" with a good
track record who can very authoritatively make an aurgument
for whatever you currently want to believe about where the
market is going. There is so much information and so many
conflicting opinions that it all becomes useless and you
just have to believe what makes the most sense to you and
take (or not take) your chances.