Only for the most part is the often missing addendum to broad sweeping statements about investing. Things like “stocks outperform bonds” or “value beats growth” typically leave out the closing refrain…only for the most part.
It may not seem important but as Peter Bernstein points out: “If it were ‘always’ rather than ‘for the most part,’ there would be no uncertainty.”
As much as people crave certainty in investing they’ll never achieve always (they’ll never stop looking for it either). Despite that, market history is filled with brief periods where investors purported always was achieved.
That Bernstein quote is from a paper that began as a speech given in September 1999. For those not investing at the time, it was the beginning of the end of a wild ride.
Back then, risk got flipped on its head. The risk was missing out. Stocks — Dotcom stocks especially — achieved always…or so people thought. And anyone who disagreed was labeled an old, out of touch, idiot. Buying into stories of unlimited potential returns do that to people. Continue Reading…