Bad Investors have Forgotten the Past

A few weeks ago I wrote about the effects of inflation, as seen in a newspaper article from 1978. What caught my attention in the article was that inflation at that time was hovering around 10%. Some of us are old enough to remember 10% inflation, and even higher. I remember getting more than 10% on a Certificate of Deposit! The point is that we tend to forget that the present state of affairs (low inflation, low interest rates, and a very, very long bull market) were not always so, and may not be so in the future. Of course, in planning for retirement, we try to make reasonable estimates of future returns. But we shouldn’t get too comfortable with the present state of affairs. If you have a long investing horizon as I do, your likely to experience many significant ups and downs in the market before you go to that great big mutual fund in the sky.