Let’s go back to the whirlpool of wealth progression over the century. I don’t have the latest numbers, but my point of the leveraging of equities is brought out graphically with this chart of sundry repositories. What’s indisputable is that equities carry the day going back to 1910. Not at first, but from their early positioning put away violins, art, bonds and stamps. Forget gold and T-bills, but not the Abstract Expressionist School of Contemporary Art. FDR’s stamp collection nosed out art and violins.
It’s like each generation finds its reason to move into and out of stocks. I’ve made art dealers rich on my picks. Their markups of 50% on their inventory tells the history. Securities are living things because of the active marketplace for them.
Because booms and busts are a way of life for those of us who deal in securities markets, we are disciplined by recessions that hit corporate earnings. Stocks fade badly. Economic growth is never certain and deep recessions destroy equity wealth. Pricy growth stocks like Tesla and its ilk do react to geopolitical tension, not just earnings per share variance. The price history of musical chairs is recurrent.
Stock market tension now pushes me further into 10-year Treasuries rather than high yield bonds. I’m a cowardly lion running a 50% long portfolio. At the worst, I can be happy in a double-wide trailer. Social Security pensions and my corporate IRA can carry us.
Even though common stocks show the longest bull runs, nothing is forever. Everything can be viciously cyclical and volatile. My wife is unlikely to agree to selling our 3 homes, particularly Palm Beach, a beauty, but it’s worth thinking about.