As you shed a few tears over the remnants of your 401(k), think back to the last century. The last year of the last century, when a couple of rather optimistic economists from the American Enterprise Institute authored an uplifting bit of prophecy for the Atlantic Monthly.
Here’s the key paragraph:
“Stocks are now, we believe, in the midst of a one-time-only rise to much higher ground—to the neighborhood of 36,000 for the Dow Jones Industrial Average. After they complete this historic ascent, owning them will still be profitable but the returns will decline. You won't be able to make as much money from them each year. We believe that in the meantime, however, astounding profits will be made.”
James Glassman and Kevin Hassett added:
“The stock market is a money machine: put dollars in at one end, get those dollars and more back at the other end. The history of these remarkable returns is vivid and undeniable, yet few investors seem to be able to make it out in the fog of hourly jabber and the haze of constant fear, and many experts seem always to draw from the past the lesson that stocks are headed for a fall.”
Talk about “haze of constant fear.” Try reading today’s Wall Street Journal.
Glassman and Hassett went on to write their famous book, DOW 36000 : The New Strategy for Profiting from the Coming Rise in the Stock Market, a $18.95 offering from Random House in 1999 that I found on Oogle.com Saturday for $1.75 -- a devaluation not much worse than the DOW's performance over these last eight days.