It can always go lower, but this is called bear porn.
Path of least resistance is higher; too high too fast for too long causes people to lever up and this blows up sometimes, like in the past few sessions.
Question is how much of the carry trade will unwind now. Regulators will socialize the losses if it happens all at once, that you can be sure of.
Sure, but I wasn't talking about long term, I meant to point out that it's foolish to say "but my folio still up tho?", especially this early while things are still unraveling.
It's actually very good to look at the longer time frames to put the current panic in a context. Average for the sp500 over the last 50 years is ~8% yoy. If you're still up 6% YTD, there's literally nothing to worry about. You might be at 0% today and 6% again tomorrow with how these things unravel.
The idea behind long term investment is that you hold a diversified basket of assets, add a little regularly and hold for >10 years. This smoothes out the various drawdowns quite a bit.
A country's financial markets can be moribund over the long term, without any sort of apocalypse.
You could buy into the Nikkei at JP¥30,000 in 1988 and sell today for JP¥30,000
Invest in the FTSE 100 from 1984 until 2000, you saw 500% growth - a 10.5% annual return. Invest from 2000 until today and you saw 20% growth, a 0.7% annual return.
The precise causes are debatable - but it's completely possible for a rich, western-style economy, with no great wars or huge natural disasters, to just sort of stop growing.
To add to your examples -- take a look at any "emerging markets" ETF, say SCHE. For the last twenty years it has just bounced around without going up. As someone who assumed that global inequality would slowly diffuse away, that poor countries would become rich, that we would all sing Kumbaya, and that this would be a way to profit modestly from that "inevitability", I have been surprised. Luckily it isn't a huge part of my portfolio at this point.
Financial advisors constantly tell you to be globally diversified, but, as far as I can tell, only America goes up. I'm starting to think it's more of a monetary phenomenon than anything "real": America prints the money, so Americans can buy stocks and American stocks go up, and everybody from around the world risks life and limb to get to said place with the money. And, Brand America may not be as shiny as it used to be, but I don't see anything else that can challenge too strongly. China for actually getting shit done, say in Africa, perhaps: They'll build the trains. But it'll still be USD that people want to hold. At some level it's like LVMH. It blows my mind that Bernard Arnault is one of the richest men in the world, on the basis of bullshit handbags for rich people. But, when it comes to money, the fashions followed by rich people are the only thing that matters.
>As someone who assumed that global inequality would slowly diffuse away, that poor countries would become rich, that we would all sing Kumbaya, and that this would be a way to profit modestly from that "inevitability", I have been surprised.
Yes, the data in Africa—the classic target of such hope—is very depressing reading. From 1961 to 2015, real GDP per capita in Africa grew by 1.1% annually (!), compared to 3.9% for Asia, 1.7% for the Americas, and 2.2% for Europe. Growth from 2001 to 2010 of 2.9% is included in that figure; it was the first decade in that period in which Africa outgrew any other continent. <https://np.reddit.com/r/MapPorn/comments/6zlj6k/countries_by...>
For now. It can still go lower.