Roaring '20s - Dead already?

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Mar 13th, 2022 12:57 pm

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Mar 11th, 2022 2:22 pm

TuxedoBlack [OP]: Deal Addict; Jul 8, 2013; 3153 posts; 5230 upvotes; Somewhere in AB

Mar 11th, 2022 2:22 pm

Roaring '20s - Dead already?

A few folks here are mentioning that the roaring '20s are dead given the pandemic and now the war.

Of course, no one can predict the future, but are the roaring '20s dead already?

I still believe that Nick is right: that the S&P 500 will be at 13,200 by the end of this decade (which is 3x what the current value is right now: 4,242).
Source: https://ofdollarsanddata.com/the-investors-fallacy/

But no one said that it'll be a straight line! Of course, we will encounter volatility.

Here are some tips to help you counter the volatility:
- Create a financial plan
- Stick to your plan
- Diversify
- If you can't handle the volatility, add some fixed income
- If you're a net buyer over the next decade then this volatility is actually your friend
- Prices going down means you get to buy more (effectively, it's a sale)

To those that have retired @will888 and @Janus2faced , and those semi-retired @freilona , this volatility sucks. I get it.

But for the rest of us @FarmerHarv , @cartfan123 , @faken , @Blubbs , @Germack , @georvu , @Deepwater , @reversi , @dropby , @mkannuri , @mastaj , @smartie , and so many more that I missed, volatility is actually a good thing. It allows us to buy more at the depressed rates. Do you disagree?

Finally, I'll end by saying that the roaring '20s are hardly dead, but no one said that the ride will be smooth.

The question is, can you stay the course?

45 replies

Mar 11th, 2022 2:29 pm

Sanyo: Deal Guru; Feb 9, 2009; 12375 posts; 11287 upvotes

Mar 11th, 2022 2:29 pm

We had a roaring 2010s… it’s very rare to have two straight decades of crazy growth

Thanks the money printing machine of the fed.. now can’t print cause inflation too high…

+3

Mar 11th, 2022 2:57 pm

Capt.: Deal Addict; Sep 2, 2004; 2846 posts; 1651 upvotes

Mar 11th, 2022 2:57 pm

I agree with your general premise and the tips in your list. However, much like investments in general, I think that the impact of volatility and one's approach to it should be dependent on life stage, financial needs, and other considerations.

After a quick read of your article I noted there is no mention of "valuation" in it. It has a lot of history and relevant data, so maybe that overpowers the valuation side of things, but I personally wonder if it's an important piece that is not being considered. Intuitively, I also feel like the impressive and extremely strong run of the S&P500 (and the US in general) will likely slow down at some point in the future.

Also, to cherry pick a quote from the article: "I have no idea what U.S. markets will return over the next 10 years, and history seems to suggest the same thing."

Lastly, I need to point out that you missed some of the best posters in this subforum. I started listed them out one by one but decided to leave them unsaid.

+4

Mar 11th, 2022 2:57 pm

georvu: Deal Fanatic; Feb 4, 2015; 9054 posts; 5309 upvotes; Canada, Eh!!

Mar 11th, 2022 2:57 pm

We try to buy everything else on sale when possible.

Why would we want to buy at MSRP or premium when volatility offers opportunities to buy on sale. Just know what you are buying. Quality stocks over meme stocks. If not sure then just index or do hybrid approach.

I posted last year or was it earlier this year [??] that while inflation high imho it will subside in second half of 2022... still believe as much however war might prolong so perhaps latter 2022 or early 2023.

Do believe second half 2022 will be better returns then first half 2022; not going out on a limb based on returns so far.

Most importantly as TuxedoBlack wrote... have a sound strategy you understand and will follow with discipline.

2022: BOC raised 8 times and MCAP raised its prime next day.
2017 to 2018: BOC raised rates 5 times and MCAP raised its prime next day each time.
2020: BOC dropped rates 3 times and MCAP waited to drop its prime to include all 3 drops.

+2

Mar 11th, 2022 3:17 pm

mastaj: Sr. Member; Dec 13, 2010; 937 posts; 1457 upvotes; Vancouver

Mar 11th, 2022 3:17 pm

I'm personally a bit undecided as to if volatility is a good thing or not. On the one hand, since I do stick to my plan of regular purchases each month, it does allow for some bargains. But, it means the rest of my investments are lower, and the benefit of discounted pricing only applies to a very small portion of my investments (e.g. only the new monthly addition).

What is true is that, no matter what we prefer, volatility is a normal and natural part of the market. So it allows each of us the chance to actually test our resolve and see how we react to falling markets. How has your investing behaviour been affected? Have you maintained and stuck to your plan? Are you still able to sleep at night? I am happy to say that, through both March 2020 and the beginning of 2022, the answers for me are: no change, yes, and yes. The caveat being, these are only two short periods of time, neither of which are prolonged bear markets - so I will continue to watch and monitor my own behaviour.

+3

Mar 11th, 2022 3:23 pm

1xTiMeR: Deal Fanatic; Apr 25, 2006; 7967 posts; 3104 upvotes

Mar 11th, 2022 3:23 pm

Hey, the roaring 20s, happened from 2020-2022. We are already in correction territory. One step closer to recession.

The US messed up the economy quite bad. So did a lot of other nations who pumped their asset prices through the atmosphere with QE and low interest rates. Gov major overreaction. So major, it makes 2008 look bad and all other crisis / black swan events look bad.

Is it a coincidence this Ukraine/ Russia war is to mask the above (and reverse to the mean) and cover up the government's negligence and poor management of covid financially? Maybe but this sell off was definitely warranted, with or without war. How much RE and stocks went up, is basically a reflection of how poor the government handled the whole thing financially.

The financial recovery for many started from Mar 2020 believe it or not (i'd argue, the vast majority of people actually benefitted from gov measures as these safe guards benefited everyone indiscriminately and the many middle or upper class didn't even need any help!), and covid only started!! That is bizzare! Many of the economic recoveries take shape 1-2 years after initial declaration of crisis. We took 2 months. Govs were so eager, they didn't even measure their own impact of fiscal and monetary policies they implemented overnight. What fools and irresponsible. You don't throw money to solve a pandemic. You throw money into the small segments of the population that were DIRECTLY affected. Not indirectly, i.e. everyoen that WFH and BOUGHT a property. You throw money at a financial crisis. I am beyond words what these governments have done to the future generations.

We are heading into a recession and commodity prices and inverted yield curve is proof of that. I will start buying when ES is approx 3800s.

Imo these tips are pretty vague. You need to know what sectors are in play right now and its a stock pickers market.

Kinda a spray and pray mentality here. May as well just dollar cost average into spy.

Here are some tips to help you counter the volatility:
- Create a financial plan
- Stick to your plan
- Diversify
- If you can't handle the volatility, add some fixed income
- If you're a net buyer over the next decade then this volatility is actually your friend
- Prices going down means you get to buy more (effectively, it's a sale)

"If you make a mistake but then change your ways, it is like never having made a mistake at all" - Confucius

+5

Mar 11th, 2022 4:02 pm

will888: Deal Expert; Dec 12, 2009; 26072 posts; 16044 upvotes; Toronto

Mar 11th, 2022 4:02 pm

I am not unnerved by this negativity. The markets will do what the markets will do in the short term. I am not buying to take advantage of short term volatility. I am buying to take advantage of the long term trend of the stock market. I am fully funded for this year. No worries until next year. BTW, I think OP is unnerved by recent market turmoil and is looking for a tension release here.

~~Koodo $40/6GB~~
Public Mobile $40/15GB, $35/20GB, lot less with rewards
Tangerine Bank, EQ Bank, Simplii

+5

Mar 11th, 2022 4:21 pm

TuxedoBlack [OP]: Deal Addict; Jul 8, 2013; 3153 posts; 5230 upvotes; Somewhere in AB

Mar 11th, 2022 4:21 pm

Sanyo wrote: ↑ We had a roaring 2010s… it’s very rare to have two straight decades of crazy growth

Thanks the money printing machine of the fed.. now can’t print cause inflation too high…

Not sure if I agree, as the 2000s decade had negative growth.

Thus the link to the article.

Be Balanced. Be Diversified. Stay Invested.

Mar 11th, 2022 4:25 pm

BernBern21: Sr. Member; Jan 18, 2022; 630 posts; 1177 upvotes; Ontario

Mar 11th, 2022 4:25 pm

1xTiMeR wrote: ↑ The financial recovery for many started from Mar 2020 believe it or not (i'd argue, the vast majority of people actually benefitted from gov measures as these safe guards benefited everyone indiscriminately and the many middle or upper class didn't even need any help!), and covid only started!! That is bizzare! Many of the economic recoveries take shape 1-2 years after initial declaration of crisis. We took 2 months. Govs were so eager, they didn't even measure their own impact of fiscal and monetary policies they implemented overnight. What fools and irresponsible. You don't throw money to solve a pandemic. You throw money into the small segments of the population that were DIRECTLY affected. Not indirectly, i.e. everyoen that WFH and BOUGHT a property. You throw money at a financial crisis. I am beyond words what these governments have done to the future generations.

The way governments around the world simultaneously threw money around like confetti, it's almost as if there was a coordinated agreement done well ahead of March 2020 that was planned out

But that's another discussion for another thread..

+2

Mar 11th, 2022 4:30 pm

TuxedoBlack [OP]: Deal Addict; Jul 8, 2013; 3153 posts; 5230 upvotes; Somewhere in AB

Mar 11th, 2022 4:30 pm

will888 wrote: ↑ I am not unnerved by this negativity. The markets will do what the markets will do in the short term. I am not buying to take advantage of short term volatility. I am buying to take advantage of the long term trend of the stock market. I am fully funded for this year. No worries until next year. BTW, I think OP is unnerved by recent market turmoil and is looking for a tension release here.

Hahah... is that what you think? This little market volatility doesn't bother me one bit. I stick to my plan.

When the markets actually crashed 2 years ago, I followed the plan (and even leveraged up by refinancing and taking out a HELOC). Of course, that timing was pure luck LOL.

But I'm noticing a few folks questioning the long-term trends of the stock market so I thought I'd share my views. But, you think what you think. No issues.

I'm glad, however, that you are unnerved. BTW, did you eve feel that you should have waited to sell / withdraw from your RRIF so that you can avoid paying less taxes? (This assumed that you re-invested those funds back into your non-reg account.)

Be Balanced. Be Diversified. Stay Invested.

+2

Mar 11th, 2022 4:33 pm

TuxedoBlack [OP]: Deal Addict; Jul 8, 2013; 3153 posts; 5230 upvotes; Somewhere in AB

Mar 11th, 2022 4:33 pm

1xTiMeR wrote: ↑
We are heading into a recession and commodity prices and inverted yield curve is proof of that. I will start buying when ES is approx 3800s.

Imo these tips are pretty vague. You need to know what sectors are in play right now and its a stock pickers market.

Kinda a spray and pray mentality here. May as well just dollar cost average into spy.

Here are some tips to help you counter the volatility:
- Create a financial plan
- Stick to your plan
- Diversify
- If you can't handle the volatility, add some fixed income
- If you're a net buyer over the next decade then this volatility is actually your friend
- Prices going down means you get to buy more (effectively, it's a sale)

Don't know when the next recession will happen. I also don't know what the markets will do over the next year, 3 years, and 5 years. But the "spray & pray" is exactly what I am advocating: buy and hold a passively managed index fund and hold on. It is so simple that it's mind-boggling.

I wouldn't just buy SPY, btw. Not diversified enough. @will888 , read this: https://humbledollar.com/2022/03/fight-that-bias/

Be Balanced. Be Diversified. Stay Invested.

+1

Mar 11th, 2022 4:45 pm

will888: Deal Expert; Dec 12, 2009; 26072 posts; 16044 upvotes; Toronto

Mar 11th, 2022 4:45 pm

TuxedoBlack wrote: ↑ Hahah... is that what you think? This little market volatility doesn't bother me one bit. I stick to my plan.

When the markets actually crashed 2 years ago, I followed the plan (and even leveraged up by refinancing and taking out a HELOC). Of course, that timing was pure luck LOL.

But I'm noticing a few folks questioning the long-term trends of the stock market so I thought I'd share my views. But, you think what you think. No issues. I'm glad, however, that you are unnerved. BTW, did you eve feel that you should have waited to sell / withdraw from your RRIF so that you can avoid paying less taxes? (This assumed that you re-invested those funds back into your non-reg account.)

I generally don't market time the decumulation. I took the funds out of the US market in the first week of January and bought the Canadian market in the TFSAs. The rest of the cash is shrinking in my Tangerine account. If only food was not so perishable, I would buy groceries for the year now. If the market crashes, I will do an off schedule decumulation and pay the taxes so that I can move shares from registered to non-registered account. If there is a 50% drawdown, I get to move 2x as many shares for each dollar of taxation. The CRA is my silent business partner; they share in the losses.

~~Koodo $40/6GB~~
Public Mobile $40/15GB, $35/20GB, lot less with rewards
Tangerine Bank, EQ Bank, Simplii

+1

Mar 11th, 2022 4:49 pm

will888: Deal Expert; Dec 12, 2009; 26072 posts; 16044 upvotes; Toronto

Mar 11th, 2022 4:49 pm

TuxedoBlack wrote: ↑ Don't know when the next recession will happen. I also don't know what the markets will do over the next year, 3 years, and 5 years. But the "spray & pray" is exactly what I am advocating: buy and hold a passively managed index fund and hold on. It is so simple that it's mind-boggling.

I wouldn't just buy SPY, btw. Not diversified enough. @will888 , read this: https://humbledollar.com/2022/03/fight-that-bias/

I listened to the latest rational reminder podcast this morning. They covered home country bias. Canadians are actually well diversified globally. Many investors around the world are virtually 100% invested in the home market.

~~Koodo $40/6GB~~
Public Mobile $40/15GB, $35/20GB, lot less with rewards
Tangerine Bank, EQ Bank, Simplii

+1

Mar 11th, 2022 4:54 pm

Sanyo: Deal Guru; Feb 9, 2009; 12375 posts; 11287 upvotes

Mar 11th, 2022 4:54 pm

TuxedoBlack wrote: ↑ Not sure if I agree, as the 2000s decade had negative growth.

Thus the link to the article.

What I mean is we haven’t had two straight decades with 13% returns averaging yearly…. And 2020/2021 had amazing stock market returns especially the high growth tech names that are now deflating cause of extreme valuations.

I’m still investing in my dividend stocks that have largely done well…. no where else to invest but I’m also in my late 30s so I don’t really care what the market does yearly or over even decades…. But I am anticipating lower growth in the 2020s…

+2

Mar 11th, 2022 5:39 pm

reversi: Sr. Member; Dec 26, 2019; 777 posts; 1307 upvotes

Mar 11th, 2022 5:39 pm

I’ll be first one to admit that I have no bloody idea what’s going to happen in the markets. All I know is that I’ll continue to contribute to globally diversified ETFs and continue to collect dividends in my margin account.

I know that these decisions have the highest likelihood of success given my personality.

The key is that everyone needs a plan that they are confident they can stick with.

+3

Mar 11th, 2022 5:41 pm

reversi: Sr. Member; Dec 26, 2019; 777 posts; 1307 upvotes

Mar 11th, 2022 5:41 pm

Also to add, this and all other forums overreact to minor blips all the time. We were at ATHs 2 months ago, and now we’re writing off a decade? Seems premature.

+6

Mar 11th, 2022 5:49 pm

will888: Deal Expert; Dec 12, 2009; 26072 posts; 16044 upvotes; Toronto

Mar 11th, 2022 5:49 pm

reversi wrote: ↑ Also to add, this and all other forums overreact to minor blips all the time. We were at ATHs 2 months ago, and now we’re writing off a decade? Seems premature.

This is why I am saying OP is unnerved by the ongoing drawdown. This thread is a stress relief. Nobody know what the market will do in the coming years. If we are passive investors, we are betting on the long term upward trend which has been pretty reliable. Not even wars and depression were able to stop this upward trend.

~~Koodo $40/6GB~~
Public Mobile $40/15GB, $35/20GB, lot less with rewards
Tangerine Bank, EQ Bank, Simplii

+1

Mar 11th, 2022 6:11 pm

BernBern21: Sr. Member; Jan 18, 2022; 630 posts; 1177 upvotes; Ontario

Mar 11th, 2022 6:11 pm

will888 wrote: ↑ This is why I am saying OP is unnerved by the ongoing drawdown. This thread is a stress relief. Nobody know what the market will do in the coming years. If we are passive investors, we are betting on the long term upward trend which has been pretty reliable. Not even wars and depression were able to stop this upward trend.

I just keep reminding myself that this is a good thing - ignoring all the geopolitical strife going on.
When it comes down to the nuts and bolts, the market was very overvalued 2 months ago as @reversi pointed out earlier. Looking at this chart, it gives me solace to see the prices come back to a healthier level. This will allow us to go on a continued run for the remainder of the decade.

I only mentioned geopolitical strife above, but the other major factor in this is also how the central banks will deal wth inflation. But again, it's only noise that will alter the short term (and possibly medium term) price fluctuations.

My portfolio (in my signature) seems similar to many others; I dont have any trouble sleeping at night except for possibly 1 reason: I dont have more spare cash to keep adding in on the way down. Nobody knows how much longer the market will keep correcting and the illustration I attached isnt meant to assume the market will eventually hit a fair value - it might change course or flatten out for a while. Nobody knows. It's best to just sit back and enjoy the ride and be thankful we have a great buying opportunity in our young-ish lifetime.

+3

Mar 11th, 2022 6:29 pm

faken: Deal Guru; Sep 21, 2007; 11781 posts; 10175 upvotes; Winnipeg

Mar 11th, 2022 6:29 pm

The volatility this week made me 250% this week on 2 plays.. All I know is, indexing long term is proven to have returns and less stress than stock picking. I don't look at portfolio percent increases anymore, I look at dollar value because I know how much in dollar wise I want by retirement. Some plays can be better than others and looking back and think I should have put more in company A than company B will drive you mad. People are also forgetting that there's more to life than just money and penny pinching you'll miss out on life.. I'd also like to tag @MrMom in this and I think he/she has just as much risk adversity as all of us. Learned a ton off his/her posts to make some decisions a bit easier.

Edit: Grammar

Last edited by faken on Mar 12th, 2022 10:07 am, edited 1 time in total.

"An essential aspect of creativity is not being afraid to fail." -- Edward Land

+5

Mar 11th, 2022 10:02 pm

dropby: Member; Jan 9, 2017; 461 posts; 645 upvotes

Mar 11th, 2022 10:02 pm

I don't know where SP500 will be at the end of the decade and I don't care. Before retirement, I will buy stocks when the price is not overvalued and I have money. At retirement time, I need to decide what to do with the group RRSP money, DGI stocks or index or growth stocks. After retirement, I will rely on dividends for daily expenses and hopefully market volatility won't affect me.

And yes, when I have money, market down is a good opportunity. I have bought 100 shares of PYPL at 94.5 recently which I consider a pretty good price. Still have some money in TFSA and RRSP that I need to deploy.

+1

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