- a lost 13 years of investment returns (since 1998);
two large drawdowns in the U.S. stock market since 2000 -- these were two of the only five greater-than-40% stock market drops since 1900;
a flash crash (whose origin is still unknown);
the shock from the depth of the Great Decession of 2008-2009;
a 35% nationwide drop in home prices, limiting the opportunity for home equity loans and cash-out refinancing;
tax, economic, political and employment uncertainty;
the impact on volatility created by high-frequency trading strategies and leveraged ETFs; and
the continued threat of screwflation of the middle class -- as wages stagnate and the cost of the necessities of life continue to rise, stocks become less of a priority.
As I discussed in yesterday's opening missive, the outlook for the U.S. economy and its consumer base is markedly better in 2012 than it was in 2011, and there are substantive reasons to believe that the individual investor will return to the U.S. stock market in the fullness of time. (Hat tip to Gary Shilling for the charts below.)
- Share prices continue their ascent.
Domestic economic growth appears to be muddling through, and the threat of recession is low.
The consumer has deleveraged -- household debt as a percent of GDP has dropped down to historic trend levels, household debt as a percent of disposable income is at a five-year low, as are debt service and financial obligations ratios.
Employment is slowly but steadily improving.
The global playing field is leveling, as labor costs increase in China and in other emerging markets just as factory automation is slashing labor costs in the U.S.
The U.S. housing market has stabilized in price and turnover.