Mario is dead: Long live the Mario

Mario Cuomo (1932-2015)

Happy talk from Robert Lenzner of Forbes misses the 180 month bear market in performance

Robert Lenzner of Forbes, here, is only off by an order of magnitude (18 months vs. 180):

Bull markets last on average about 97 months each and gain an average of 440 points in the Standard & Poor’s 500 stock index. By comparison bear markets since the 1930s have an average duration of only 18 months and an average loss in value of about 40 percent.

Let's talk the most recent bear market in performance.

If you invested your nest egg in the stock markets fifteen years ago in a total stock market index fund, your average return annually, say in VTSMX, would be 4.75% through 2014, per Morningstar.

On the other hand, if you had taken the safe route and invested everything in an intermediate term bond index fund, say in VBIIX, your average annual return would be 6.52% through 2014, also per Morningstar.

DESPITE THE PHENOMENAL PERFORMANCE OF STOCK MARKETS SINCE 2011, WHEN THE S&P500 REVISITED THE 2008 CLIFF LEVEL BEFORE THE BOTTOM IN 2009, STOCKS ARE STILL IN A BEAR MARKET. NO ONE REALISES HOW BAD THEIR CONDITION STILL IS.

Only fools are investing in the stock market today. Returns from stocks 10 years from now will be similarly disappointing as they have been since 1999. If you have physical gold, keep it, imho. And if you can, raise cash, imho. Opportunities for riches to agile investors who are prepared to scoop up bargains as in the 1930s are in the offing.

As everyone should know by now but doesn't, 1999 was a blow off top period leading up to the previous inflation-adjusted stock market peak of August 2000.

Valuations today have still not reproduced themselves in comparison to the end of 1999 on a total market cap to GDP basis, but they are way above the 2007 levels and represent an historically exceptionally rarefied level of valuation. Valuation at the end of 2014 based on total stock market cap to GDP will be relatively certain with the second report of 4Q2014 GDP at the end of February.

Stay tuned.

Erick Erickson asserts a difference between libertarianism and libertinism

Today filling in as guest host of the Rush Limbaugh Show in response to a caller recommending the Republican Party move in a more specifically libertarian direction.

The comment was more diplomacy than wisdom.

In the Molly Ball feature on Erickson for The Atlantic here, Erickson more than once eschews libertarianism, let alone libertinism:

“Nationally, people think of me as a Tea Party person, and I am,” Erickson told me. “But in Georgia, the Tea Party can’t stand me.” The local movement, he explained, is dominated by libertarian followers of former Congressman Ron Paul, and Erickson has opposed many of its chosen candidates. Erickson’s conservatism is of a more traditional bent, deeply informed by his evangelical faith. He believes Republicans must not yield in pursuit of small government, strong national defense, and the primacy of the traditional family.

Erickson sounded almost gleeful as he told me about the Tea Party hating him. He seems to delight in confounding expectations, and in almost every way, he refuses to be pigeonholed: he is a southerner who defines himself by his small-town sensibility, but he spent most of his childhood in Dubai. He speaks for the conservative grass roots, but he pals around with cable-news regulars and Beltway elites. He’s a strict no-compromises ideologue, but during his one foray into elected office, he was a model of bipartisan cooperation. ...

When I pressed him on whether his zeal for regulation while on the city council was at odds with his less-government philosophy, he said he believed human trafficking was a problem that government should have a role in solving. “I’m not a libertarian,” he said. Even small-government absolutists, after all, can agree that sexual slavery ought to be prevented.