My view is Buy & Hold, because it always comes back, will destroy retail investors.

We are at the top of a Secular Bull market. Secular markets are counted in decades not years. You have to know where you are and why we reached this level to make a long term investing decision.

Let’s relook the last 100 years or so from an inflation adjusted perspective. Some will say the stock market includes inflation so this is not a fair look, but you can invest in safe interest bearing assets that keep up with inflation. So it is a fair look.

I chose the peak of 1929 as an example because we are at a peak today. It took 30 years to breakeven adjusted for inflation, but how long did it take to breakeven and never look back? 60 years.

The 1972 peak would have been revisited in 2009 (37 years) if the Fed had not stepped in and started their money printing disaster we are about to live out.

NOT inflation adjusted Nikkei 225 (Japan) just returned to its 1989 level with the copious help of a money printing, interest rates suppressing central bank. And guess what – it will fall below the 1989 level in the next recession. Oops, it already has.

I would not be surprised if the US stock market returns to the 1929 level adjusted for inflation. Why? Valuations, leverage and policy matter.

Jesse Colombo provides one look of the Nasdaq-100 to our money supply. The Nasdaq-100 holds the Magnificent Seven and has been the leading index this bull market.

All long term valuations point to historic levels that will be unwound during any economic slowdown and deleveraging. It can happen faster than you imagine because of deleveraging, but the start date is hard to predict.

There are periods in history where just keeping up with inflation is winning. That time is now. Imagine if you avoided the largest drawdowns in history and then bought and held.

I measure the TSP G funds gains as interest earned + TSP C fund losses. It changes your perspective.

Protect yourself.

Invest smart,

Michael Bond

TSPsmart.com

Categories: Perspectives