What if Japan style collapse comes to America and the market goes down/sideways for the next 20-30 years?
Let's just assume for a moment that this happens and avoid a debate about whether or not it will: what does this mean for investing strategy which, up until the crash, was to just buy and hold a diversified portfolio and assume 8-9% annual nominal returns?
The Nikkei 225 has returned a total of -50% (yes, negative) over the past 30 years though deflation and stronger yen relative to other currencies may have blunted some of that impact. Only from 2011-2019 did the Nikkei return a respectable 7-7.5% pa.
At what point would you pull your money from the market and put it into cash or bonds? One strategy is to ensure geographical diversification and invest in other developed and emerging markets - but many of them are tied to the US so it may not provide much of a hedge.
EDIT: My point is not about whether this will happen or not, but to have a plan for scenarios that could be increasingly likely given the unprecedented run up in the Fed's balance sheet and long term effects of economic shutdown
Submitted May 12, 2020 at 08:01PM by ThenIJizzedInMyPants https://ift.tt/3dCYuhw
