Ashby Foote offers an interesting analogy, yet an incomplete analysis in his comparison of “Stocks and Stockcars.” Foote uses the comparison of the strongest S&P sectors in the last five years to make the case that the U.S. economy has lost its leadership position in the world economy. That may or may not be the case, but unlike a NASCAR race, the economic race has no finish line. Thus, Foote has made a mistake common in extrapolation analysis whereby the view from today is used to make predictions about the future.
Although Energy, Mining and Raw Materials stocks have fared the best in the past five years, there is no compelling logic to suggest that will be the case for any period into the future. All one has to do is examine the mentality of the retail investor in the late '90s to see how that thinking can not only turn out wrong, but get you in trouble.
When the S&P 500 was measured “over the last XX years” in 1999 for example, it led investors to believe the norm was an average annual rate of return for stocks that was 13, 15 or 17% (depending on the starting point). But what is forgotten is that the “end” point turned out to be a pretty famous market peak. Any “average annual rate of return” figures will be skewed depending on where the particular index is at the “end” point.p>Unlike a NASCAR event where participants have a very specific end to their race, the financial markets and world economy will go on as long as we do. Today’s “slingshot” often ends up as yesterday’s burst bubble. br> — William Stewart /p> p> POWER POINTS
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?