06-24-2016, 07:32 AM
This reminds me about something I ponder all the time. What I think happened in the 80s is that stock ownership changed from something available to only the wealthy to something available to everyone. Regulatory changes (I think!) and lower-cost brokerages meant that huge swaths of the population could reasonably play in the stock market that never could or did before. This created a huge, decades-long tailwind to stock prices as massive new demand arose for securities. This long, but nonetheless one-time, event has more or less played itself out, and this tailwind is gone. Now, pretty much everyone who is going to play in the market already does, through index funds and/or their 401(k)s, etc. Not only is this tailwind gone, but as the boomers retire and pass away, it may actually reverse a bit, as demographic trends lower (somewhat) the demand for securities.
When people talk so glibly about the fortunes made in the market if you had just bought, say, $10,000 of KO in 1985, I think they ignore this dynamic. It has skewed how we think about the market and expected returns.
I've never read anything about this, but if anyone knows of any books or articles that discuss it, I would love some links.
When people talk so glibly about the fortunes made in the market if you had just bought, say, $10,000 of KO in 1985, I think they ignore this dynamic. It has skewed how we think about the market and expected returns.
I've never read anything about this, but if anyone knows of any books or articles that discuss it, I would love some links.