Rapidly learning the lessons of risk and return

I just wanted to highlight a couple of posts that touch on the idea of investor disgust with the stock market. Yesterday I had a post up looking at how investors giving up on the stock market as one sign that we are getting closer to to onset of a new secular bull market.* That is marked contrast with the ongoing ‘lost decade for stocks’ that I discuss in my book.

The problem with simply giving up on investing is that you lose the chance to gain some experience in the markets that will likely serve you well down the road. I have a guest post up today at Josh Brown’s The Reformed Broker looking at this very issue. I write that we can look at secular bear markets as a laboratory for investing:

Secular bear markets happen to be a great time for investors to learn the lessons of risk and return. Why? Because we see these cycles play out in a much more rapid and concentrated fashion. Secular bull markets are in contrast a tough time to gain much perspective on the true challenges of investing.

Check out the post for the whole story. You might get a different perspective on why might now be a good time to get acquainted with investing.

*John Authers at the FT thinks the onset of the next ‘cult of equities’ is far off. He believes we need to see the end of ‘financial repression’ before that can happen.

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