Investment Returns June 2008: There Is No Present Tense

Jim Picerno over at Capital Spectator has asset class returns for June:

I find that looking at the past helps me to understand . . . the past.  I can also say that my own picking of U.S. stocks isn't that bad, given that my own portfolio is down 8.1 percent in June. (That was a hypothetical statement, unfortunately.)

What does this table tell you about the future?  Not a thing, and that's a pretty subtle insight.  Thousands of people with 401k accounts are bailing out of the stuff that's down and investing in the stuff that's been rising, even though the past does not foretell the future.

Here's a simple way to think of it:  there is no present tense in the stock market.  The market never "is" going up or down.  It "has" gone up or down, and it "will" (maybe) go up or down.  But there is no present.

Comments

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