12. Rules of the Road

How about a map?

Assuming deleveraging occurs and leads to a more challenging economic and investing times, most investors will probably not be prepared. One reason is their expectations may be much greater than the types of returns investments delivered over the past nine decades. As shown in Chapter 3, “Nine Decades of Real Asset Class Returns,” those returns have not been consistent, and most recently, the long-term equity returns have been negative. In Japan, the stock market is still down over 70% from its peak and 10-year Japanese Government bond yields remain below 2%. There are times to act with greater caution and there are times investors can act more boldly. Structural bear markets are times to act more cautiously, ...

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