Gold 1786,925
|
EURUSD 1,1764
|
DJIA 35335,50
|
OIL.WTI 67,835
|
DAX 15837
|
|---|
In developed countries, life expectancy has increased in recent decades. That means that the investment horizon has also changed dramatically. This could fundamentally change the logic of the US stock market.
S&P 500
How did it work before? Back when Warren Buffett was making his first money in the market?
A young man would go to university, gain knowledge, start a job and grow in his career. By the time he was 30, he had the opportunity to start investing. And the investment horizon was 30 years to retire by 60 and enjoy the fruits of investment. The problem is that not many investors even lived to be 60.
Today, things are different. Thanks to technology, the cost of entry into the market has come down drastically + commissions have come down + buying stocks or CFDs on them, has become a simple matter.
Virtually any university or college student can start long-term investing at the age of 20. That said, such a person will work till about 70-80 years. And live until 90. In other words, their investment horizon grows from 30 to at least 50 years.
And this is a critical difference from what it was in the last century.
The cost of a mistake is no longer as high as it used to be. If the stock market goes down, the long-term investor has a lot more time to spare. One can buy more on dips and wait for the market to make new highs.
And this leads to a new paradigm. Any dips in the equity market will be redeemed faster and faster. After all, any entry price, with decades of investing still ahead of us, is good. If it’s a couple of per cent lower than it was a week ago, that’s already a great entry point.
The new paradigm could mean that in a few years we won’t see a correction in the US stock market at all. And it will only be possible to move it down for a very short time. And by something out of the ordinary (the example of the coronavirus epidemic).
03.30 Australian retail sales for July
16.00 US University of Michigan Consumer Confidence Index for August
Important Notes on This Publication:
The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.