Tuesday, December 2, 2008
I am looking at the long-term trend on the DJIA. It seems to me that between the recovery from the 1987 drop and the beginning of 2008 that the Dow stayed pretty close to 11,000, with the exception of the pit after 9/11 and the inflated prices of 2006-2007. So a normal adjustment should have taken us down below 11,000 temporarily and then started to slowly rise again. When we do begin to recover, my bet is that we will average back in the 10,000 - 11,000 point range. So, those wonderful gains at 14,500 points are a thing of the past and those of us looking at retirement sometime in the next dozen years better assume that we won't regain more than 2000 - 3000 points at best and that growth in any equity portfolio is more likely to be 4-5% than 10%+. SO......when the Dow comes back to 10,000, investing most of a portfolio in TIAA annuities look very competitive from my point of view.