When everyone assumes, at least implicitly, that the market is an actuarial table, that the past is inevitably prologue, and that common stocks, held over an extended period, will always produce higher returns than bonds--and at lower risk--then stocks inevitably will be priced to reflect that certainty. At that point, however, the certainty becomes that stocks will produce lower future returns, and at higher risk at that. It is impossible to escape the suspicion that such an actuarial mindset, if you will, is extraordinarily prevalent today among investment advisers, consultants, and economists--and, for that matter, the individual and institutional investors themselves. Forewarned is forearmed.
John Bogle in Risk in an Era of Confidence via Morningstar (4/28/00)People who buy stocks when they get bonuses and sell them when the roof starts to leak are entrusting their investment decisions to their roofs.
Andrew Tobias in eTrade The Magazine (Spring 2000 - excerpt from The Only Investment Guide You'll Ever Need)
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