"Opportunity of a Lifetime"?

“Opportunity of a Lifetime”?
Monday, June 8th, 2009

One phrase that I have heard mentioned a few times is that the economic and market declines of 2008-early2009 created a “Opportunity of a Lifetime” to buy stocks, businesses, and other assets.

I am not sure what reasoning is used to justify the “Opportunity of a Lifetime” phrase (and no reasoning has been provided). It would seem, however, that for this to be true, one would have to believe that the severe market and economic declines experienced in 2008 and early 2009 were transitory and presumably represented some inexplicable downdraft that will have no ongoing significance. In other words, now things are getting back to “normal,” and the trends we have seen from 2002-2007 (if not earlier) will return…i.e. strong markets for assets and strong corporate performances.

Readers of this blog know that I am not of that opinion. I believe that we are in a completely “new environment,” and that, as such, it is dangerous to rely on historical trends for forecasting or valuation purposes.

For those who are skeptical of this “new environment” classification, I could (and have) provided various arguments; however, one point in particular I would highlight is never before have we had such pervasive (and large scale)government intervention and “guarantees” in existence in various markets. In my opinion, this alone indicates we are in a “new environment.”

SPX at 929.02 as this post is written