> I look forward to your weather report too: "It's always sunny outside until one day it starts raining. Every time."
I once ran across the comment that if you simply predict tomorrow's weather will be the same as today's you'd be correct 80% of the time. Not sure how true that is (can't find the source).
There are momentum indices. Momentum is actually a strange phenomenon from the perspective of the efficient market hypothesis because it does not have an obvious risk to balance its premium compared to other empirical factors.
Not at all, if someone tells me that "This stock is historically likely to regress to and beyond the mean," it's information I can use to evaluate my risk tolerance. Just because a piece of information doesn't let you time the market like a psychic doesn't make it worthless, it's just not what you were looking for.
Productive workers in society need to learn new things all the time. I can't think of any career that hasn't changed in my life. I recall a garbage man (sexism probably wasn't required even then, but I never recall females) hanging off the back of the truck while the driver drove to the next house - the driver today needs to know how to operate the arm on the truck that lifts my can. Fast food used to be cooked within 10 minutes of when it was thrown, now they obviously are keeping things warm for a lot longer.
> I mean these stocks have been performers for decades. If you posted this 10 years ago you'd look really wrong.
And Japan performed ridiculously well for over decades and then stagnated for decades after that, but it averaged out between the two periods:
> Ben Carlson: It's just a really long mean reversion. You got like 22% per year from 1970 to 1989 in Japan. Small caps in Japan did 30% per year for two decades.
> It's insane. The returns almost had to be poor after that. If you put them together, the boom with the bust, it's like almost 9% per year.
> It's kind of crazy. Over 50 years, the long-term worked. It's just that over that 20 or 30-year period, it didn't work so well.
Annualized 9% per year is pretty good: the S&P 500 has average 10% since 1957 (70 years). Is there anything preventing US equities from doing the same thing: great performance from 2010 until now, and then 10+ years of stagnation starting (theoretically) tomorrow. If you look at 2000s S&P 500 you got zero returns, and the only thing that would have saved a US domestic (only) investor was having a bond allocation:
This is why diversification is important. People talk about "US stocks" doing well, but have US industrials done better than non-US industrials? US finances or energy done better than non-US? Or are "US stocks" doing better simply because tech stocks specifically have done better? Perhaps a US allocation is really a tech sector play:
IMO, it's an argument against diversification. The Nikkei's decade-long stagnation is proof that the indices that are widely considered "diverse" are not immune to stagnation. This is from a trader/investor's standpoint. Of course, the S&P can return 0% in a few year timeline, but the American economy would really have to stall to return 0% over a 10+ year time horizon. This might shock the Kevin O'Learys and Dave Ramseys of the world, but picking stocks that outperform in any macro environment is easy, you just have to have the stomach for vol and continuously invest.
Every time.