ECONOMIC MYTH NUMBER ONE.
In the late 1960's the U.S. stock market and the U.S. dollar were thought to be the best investments in the world. These were two myths of major magnitude. Reality was that an economic boom created by the end of World War Two ended a 20 year cycle of major recession in the 1950's, which began in the 1930's. The end of World War Two began a seventeen year stock market boom. From 1949 to 1966 (17 years), the S & P 500 rose 415%. Almost every currency was pegged to the U.S. dollar. This created the myths that U.S. stocks were the best and that U.S. dollars were as good as gold.
At that time almost everyone was investing in Wall Street and the dollar. But they were wrong! The rising U.S. equity and dollar cycle had ended. A new cycle had begun. From 1966 to 1982 (16 years) the U.S. market and dollar faltered badly. The dollar fell to barely a fourth its value versus the German Mark, Swiss franc and Japanese yen. Wall Street was in turmoil and the S & P Index rose less than savings rates! The new reality is shown by the top twelev performing markets: Hong Kong, Japan, Singapore, Netherlands, Sweden, Belgium, Denmark, Norway, Switzerland, Austria, Germany and Finland.
The U.S. stock market did not even make the top ten in this new trend. $10,000 invested, which kept pace with the U.S. market turned to $83,700. Those who invested in Hong Kong instead, turned the same $10,000 into $1,052,570 and made $968,000 extra!
At this moment in time, shares are really hot in New York. The fundamental reality? Wall Street's boom is doomed! Since 1949 Wall Street has fitted remarkably well into 17 year patterns of three bull cycles followed by 16 year cycles of bust. In 1949 to 1966 the S & P 500 rose 415% over 17 years. Then from 1966 to 1982 the market suffered turmoil. Starting in 1982 the market rose (again in three waves) by 389% by the end of 1995. The market rose again in 1996 (the 16th year) to a total rise again of 415%.
The U.S. stock market could dive at any minute, yet millions of investors, especially those 50 and under (who have never seen a full cycle as investors), continue to pour billions into this overheated market. These could be wiped out, just as in the late 1960's and 1920's.
