Editor, The 10th Man
April 30, 2015
Civilizations rise, but they also fall from time to time. I don’t think we should naïvely assume that US stocks will go up throughout our lifetimes. They might not! I can think of a million reasons why they won’t.
But It’s Cheap
- Active managers can go to cash. There’s a lot more pressure on portfolio managers to stay fully invested these days, but they do have the latitude to go to cash, which helps cushion against losses on the way down.
- Nobody can take the drawdowns (except my Coast Guard friend). Everyone puked their index funds on the lows in 2009. Everybody. Then they bought back in with the index 100% higher.