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The hype around China is seductive, especially when we're mired in a recession. Any ray of hope is worth a few minutes of our time. Even a turning economy isn't enough ... it hasn't turned yet! So, we have the promise of China.

Well, China is about to learn about the downside of capitalism. A bear market could be threatening the country, driving home the notion that free markets (even if only slightly free) involve some risk, and proving to the American public that inside every sure thing is a hefty dose of "flavor of the month." The bears are circling Shanghai, even as the U.S. equity market appears to be coming back.

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Bears circling China originally appeared on BloggingStocks on Thu, 20 Aug 2009 10:15:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>equity marketequity marketsEquityMarketEquityMarketsinthenewsrecessionshanghaishanghai stock exchangeshanghai stock marketShanghaiStockExchangeShanghaiStockMarketThu, 20 Aug 2009 10:15:00 EST<![CDATA[Why don't "financial experts" look at historical perspective?]]>http://www.bloggingstocks.com/2008/11/24/why-dont-financial-experts-look-at-historical-perspective/http://www.bloggingstocks.com/2008/11/24/why-dont-financial-experts-look-at-historical-perspective/http://www.bloggingstocks.com/2008/11/24/why-dont-financial-experts-look-at-historical-perspective/#commentsFiled under:

Bad markets bring out "financial experts" in droves. Bad news is great for the media biz. All that confusion and panic. What a wonderful opportunity to "help" beleaguered investors understand what is going on.

What's the quality of the advice so freely given?

Historical data is not predictive, but at least it's factual. The musings of talking heads is often inaccurate, not predictive and rendered in a historical vacuum.

Here's some data that may help you sort out the mess we're in.

2000-2002 was the worst three-year period in the last thirty-eight years for both the large U.S. equity markets and the non-U.S. equity markets.

The aggregate loss for large U.S. equity stocks was 43.07%. For non-U.S. stocks it was even worse: 51.55%.

But look what happened from 2003-2007. U.S equity stocks increased in value by an aggregate of 65.57%. Non-U.S. stocks gained 109.92%.

Investors who panicked lost big. Those who stayed the course profited handsomely.

When you look at smaller sectors, the pattern is the same: Big losses were followed by big gains.

In 1973-1974, small U.S. equity stocks lost 50.8%. But in the following two years, that sector gained 110.2%.

In 1997-1998, commodities lost 49.8%. In the following two years, it gained 90.2%

In every major asset class, there has never been a sustained period of big losses where the markets have not recovered and rewarded patient investors with significant gains.

I can't predict the future. But it makes sense to understand the past.

Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books 2008).

Why don't "financial experts" look at historical perspective? originally appeared on BloggingStocks on Mon, 24 Nov 2008 14:18:00 EST. Please see our terms for use of feeds.

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