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Market Upside Down: How to Invest Profitably in a Shrinking Economy by Vinh Q. Tran

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6. Investment Paradigms: Beliefs and Reality

The stock market began the 1980s, with its long historic climb lasting for almost 20 years. As the rally gained speed with little pause, investors clamored to get into the game. According to data from the Federal Reserve Flows of Funds statistics (FFA), as percentage of household financial assets, directly held equities had reached 28.4 percent by 1999. Including indirectly held stocks in defined contribution and defined benefit plans, household ownership exposure to stocks had climbed to 50.1 percent. That was just in time to hit the wall of the bear market in early 2000.

The ensuing destruction of wealth by the bear markets in 2000 and 2008 went beyond the losses indicated by the percentage declines ...

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