Here’s Why the Next 10 Years Will Be A Stock Picker’s Market

  • Posted by on January 27th, 2015 at 1:09 am

In late 1999, Warren Buffet told the world that the next 10 years will be tough for the stock market. And he was absolutely right. The S & P 500 actually lost 30% in that period.

Jesse Felder has an intriguing post on the subject. He says that some of the current market valuations are even higher than they were in the late 90s. Does that mean that we are in for another rough decade? Maybe. It depends on your market approach.

The period between 2000 and 2010 brought a lot of turbulence for the stock market. We had two “once in a 100-year storms” – the big correction in early 2000, when the Nasdaq Composite had an 80% drawdown and 2008/2009, when the S&P 500 had a 57% plunge. The very same decade also brought us epic bull markets in commodities and emerging markets, monstrous trends in consumer discretionary and technology names like Apple, Google, Monster Energy, Chipotle, Blackberry, etc. These are just a few of the huge multi-year moves that happened during the so called ‘lost decade”. There were countless more 50%-100% moves during each year. There were even more 25%-30% moves within each quarter and even more 10-15% moves within each month.

Even if the next 10 years turn out to be just as volatile and crazy as the first decade of this century; even if the major equity indexes deliver negative returns for the decade and we go through several humongous corrections, there will be plenty of opportunities for shrewd traders and investors to consistently grow wealth. Some things never change in the market. One of these things is the existence of great growth and recovery stories. Financial markets are amazing opportunity machines.

You should always think for yourself and take every opinion with a grain of salt. In this case, it is obvious that I am biased. My financial research business and my personal market approach are based on the deeply ingrained belief that markets are inefficient and could be beaten with proper equity selection and risk management. I am not telling you to stop dollar-cost averaging in indexes and learn how to pick stocks. I am just sharing what has worked for me and where I will continue to focus my efforts.

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