[quote=livinincali]I tend to disagree with this statement. Look at the stock market bubble in 2000. If you invested in stocks back in 1980’s or 1990’s you were still way up after the crash but new investors to the market in 2000 going forward would be extremely lucky to be beating CPI over the years even now when we’re approaching the 2008 highs. I think housing will follow that same pattern (it did play out in Japan that way where housing prices and stock prices have drifted lower over the past 20-30 years after those bubbles popped). The next bubble will likely not show up in the previous bubble.
I personally think we’re already seeing the next bubble in Treasury bonds/total debt, but I don’t know when it will end and I don’t know how it will end. I see hyperinflation or a deflationary depression as the end game but depending on how it plays out there might be a way to take advantage. Of course it’s certainly possible that even if you win the government will confiscate the winnings in the name of fairness.[/quote]
Of course if you buy at peak, you’re screwed. Just like if you bought a house in 2005, on average, you’re still screwed today. However, like you said, if you bought stocks in the 80s and 90s, even after the .com crash, you’re still ahead. If you bought a house before 2001, you’re still ahead. Today is not 2005. So, if you bought today, you’re more likely to come out ahead than if you bought in 2005. You point out that if you bought in 2000, it’s unlikely for you to beat CPI over the last 12 years. But I say, if you bought in 2001, it’s very likely you’re coming out ahead of CPI over the last 11 years. Point is, it matters when you buy and at what price you bought it at.
Stocks didn’t drift lower over after the .com crash. It crashed, then “drift” higher, until 2008. Today, the NASDAQ is at a 12 years high. If you bought in January 2000, yes, you’re still under, but if you bought in 2001-2002, you’re probably up over 100% over 10-11 years. That’s not too shabby and I wouldn’t call that as drifting lower.
I see our housing behave similar to our stock market instead of like the Japanese housing market. Japan have problems we don’t have. Such as an aging population and low birth rate that can’t even keep up w/ the death rate. There are others, but because your demographics are different, it’s hard to draw a link.
What make you say the next bubble won’t show up in the previous bubble? There are only so many asset classes. If bubble doesn’t reoccur in past bubble assets, then wouldn’t we run out of asset classes to inflate and bubble would no longer exist?
Bring this back to my original response to flu’s:
[quote=flu](2) If you’re still mid-career in your 30-40ies and were planning an early retirement…Think twice.[/quote]
I’m stating this for myself, but inflation would make it easier for me to be ahead of the curve and retire early than if we see deflation.
