The next bar on this chart will be below 0.00%, i.e., negative returns:
Yep, if you had invested in the S&P 500 at an average cost of that index over the course of 1998–a year which included the Asian meltdown–the roller coaster ride you would have been on since then–with two years and 32 percent in gains left in the dot com boom, followed by the bust, followed by the strong gains until last year before this credit crunch–would have gotten you right back where you started.
Which is about 35 percent worse off than if you had left that money in a passbook savings account. Which represents very negative real returns.
I know the mantra is “it always comes back,” and I’m still committed to the market for my long-term funds because I believe there is a risk premium for holding equity. It’s times like these that create that premium, by reminding us exactly what the risk looks like. Something to keep in mind when I begin to near retirement.
Posted by Marc Hodak on September 13, 2008 under Practical definitions | Comments are off for this article
In this article, the LA Times headline helpfully explains that, “New rules would give FBI more freedom in U.S. operations.” That’s right, the editors there apparently consider giving government agents more leeway to spy upon, deceive, and coerce its citizens as a form of “freedom.” Did I miss something in my civics classes? Or is this just the intermediate step to Orwell’s definition?
I don’t know if Obama intended to call Sarah Palin a pig. I really don’t. But it can certainly be interpreted that way. Sure, the phrase “lipstick on a pig” is commonly used in Washington. Sure, McCain himself has even used it referring to Hillary’s health care proposal in 2007. But Hillary didn’t brand herself as the lipstick lady in 2007. Palin did two weeks ago. Everybody knows it. The media burned it into our consciousness. Before Nike, a teammate saying “Just do it,” was being supportive. After their ad campaign, he was being cliche. Same words, different time. That’s how marketing works. Obama knows this as well as anyone.
So Obama can complain all he wants about being unfairly tagged with a slur. Here’s what he’s pretending not to get. Let’s say Barack and Michele are drying dishes in the kitchen and he says something and Michele gets a look on her face. Barack doesn’t know where the look came from, but it’s not pretty. Barack says, “What’s wrong honey?” Michele says, “Did you just say I was a…” Doesn’t matter what she thought she heard. Doesn’t matter if he meant it. When it comes down to it, it doesn’t even matter if he really said it. All that matters is that she heard it. If you’re a guy, you’ve been there.
I don’t have much to say about the Republican convention other than Palin appeared to be the clear highlight. My basic problem with them all is that they propose to protect us from threats of all sorts, and to send me the bill for their protection. I have to count on them spending my money wisely. History shows little promise of that.
I don’t know how to put the graphs up here, but consider that the likelihood of the average American dying from heart disease is about 34%. You have about a 30% chance of dying from cancer. You have an almost 30% chance of dying from any other kind of disease, and about a 6 percent chance of dying in an accident. If the U.S. suffered the equivalent of a World Trade Center attack every single year, you would have a 0.2% chance of ever dying from terrorist activity.
Then consider that our government spends about 15 times as much money fighting terrorism as it does on all other threats to our health and safety put together.
Availability bias is the human tendency to ascribe a higher probability to events that come readily to mind. Over the last 8 years, many of us may have heard about or even witnessed the death of someone from disease or accident. But every one of us have seen or heard, with incessant repetition, about 9/11. The vivid sight of the plane crashing into the Twin Towers is burned into our national consciousness. 9/11 is a highly ‘available’ data point.
Our politicians have used that consciousness to organize a Dept. of Homeland Security and invade Iraq, the costs of which are approaching $500 billion. How many lives have been saved from all that fighting, over-the-top airport security, encroachment on our civil liberties, loss of respect among our allies, etc.?
The obverse of availability is peace of mind. We’ve paid dearly for it. But what would we have gotten by channeling a half a trillion dollars to medical research instead? Personally, I would much rather live with a greatly reduced fear of cancer than whatever solace I now get from having people check in at the security desk when entering my building–one of tens of thousands in Manhattan that have never been attacked.
I don’t blame our politicians. They’re doing what they do–grab money and power based on people’s fears. The media creates the fear, which is regrettable, but they too are doing what they do to sell stories.
Ultimately I blame our schools. Our system turns out analytical morons. We are all much poorer for it.
While catching a glimpse of the conventions, I came across this wonderful exchange between Don Boudreaux and a plaintive writer:
Dr. Boudreaux,
Why are you so bitter about politics? Why so cynical? Why don’t you give candidates and office holders the benefit of the doubt when they say they want to help others?
I’ve instructed my Senate staff to monitor the situation closely, make sure we’ve contacted both FEMA but also private relief organizations just to make sure that whatever happens people are prepared.
For those of you who couldn’t listen to the whole thing because you were looking for nickels in your sofa cushions, here’s a summary:
“I was born in Scranton, Pennsylvania. It doesn’t get more blue collar than that. My parents believed in the American dream. My dad fell on hard times, but we bounced back. He said to me, “Champ, when you get knocked down, get up. Get up.” My mother told me, “Joey, God sends no cross you cannot bear.” She taught us to have faith and be tough, and to face down every challenge. Our family has seen more than it’s share of adversity. We did what we had to do, and I am so proud of what we achieved.
So, now that I see so many people struggling, I have to ask, “Why isn’t the government helping all these people?”
He then proceeded to bash “my dear, good friend, and I mean it,” John McCain.
ABC News has finally noticed that the political conventions in Denver and Minneapolis will attract a large amount of prostitution.
Typical for the MSM, they get story all wrong. ABC appears to be implying that politicos draw sex workers in unusual numbers, but that was belied way down in the article itself–all conventions draw sex workers in proportion to the number of attendees.
What ABC missed, of course, is the irony that sex workers, who are offering an honest exchange of companionship for money, have to pretend to hide what they do (well, sort of). In contrast, politicians who are offering a corrupt exchange of favors for money get to pretend that they’re doing somethingcompletely different.
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