How Did We Get Here?

Our Economy experienced a long term Bull market, extending from 1982 until 2007, which coincided with a long term Bull market in Bonds.. Many innovations in technology, for instance the emergence of computers, the internet, the Dot Com boom, medical advances and bio-engineering, genetic manipulation, the Green revolution, and the Financial innovations and expansion of corporate and personal debt, all contributed to a nearly universal belief that there was only one decision to be made related to investing.. "Buy and Hold, and the corollaries "Diversify" and "a Loss is only a Loss if you Take It".


It did not matter if a stock declined in value through the normal ebbs and flows of the business cycle.... it would always recover... the Bull Market would bail out any mistakes in timing.  This investment strategy worked until it didn't.  Some observers of the investment climate think the Bull market ended in 2000.... and they may be right, as the Buy and Hold philosophy was certainly shown to be flawed by the behavior of the markets from 2000 to 10/2007.


In our opinion, one of the most persistently advanced reasons for investing in common stocks was that "you had to protect against inflation".  So the meme that came to be accepted as gospel by a public offered  tax favored saving plans for retirement was "buy Mutual Funds in your IRA or 401K or 403B and your retirement would be taken care of".  By the Spring of 2000, that meme had worked fairly well for most, until the Children of the Bull Market encountered the first experience that created a doubt about their accepted investment faith.  But their borderline cognitive dissonance was relieved when they finally got back to even in the Fall of 2007.

How well had the Wall Street  shibboleth of  investing to "Protect Against Inflation: worked?  I came across this chart, a study of the relationship of the actual  Dow through 2008, vs the Inflation Adjusted Dow.  It shows what many of us had suspected... adjusted for inflation, most of us had not done very well.

The value of the Inflation Adjusted Dow was at the same level achieved in 1966!
At which point, many began the search for another strategy, one that was not bought and paid for by the Wall Street Investment Sales Industry and their compensated and devoted minions in the Business News Media.


Many began to suspect the truth.. That when markets are raising, most if not all stocks also rise, and when markets are declining, most if not all stocks are falling.  That understanding is what would typically cause someone stumble onto this site, or another like it, looking for investment ideas that would mesh with their new investment paradigm....."How to be Long the Markets when the Markets are advancing, and How to be Out of the Markets when the Markets are Declining".