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Will professionals do any better? Surely the investor needs to decide whether to be invested ot not, the professionals just stock-pick???

From your post it seems you feel that history must repeat and that the norms of decades ago should become the norms again. Well maybe but wouldn't we need to get back to the situation again of say post-war? There was very little capital then, it had all been spent on the war. So capital values were low and yields high.

We haven't had any capital destruction like a war for a while now, and the world is very productive. Maybe there's excess global capacity, and so capital yields little in real terms. This would tend to keep p/e ratios high and prices of capital goods like houses high.

The other thing is that there's now a huge disparity of wealth, ie huge amounts of capital are owned by rich people. Rich people tend to save more than poorer and so there's less consumption than during earlier times. This tends to cause the fed to keep interest rates low, to encourage borrowing and spending, but it also encourages borrowing to invest, and hence high stock and house prices.

Further, the increasing importance of Asian economies, where saving is much more emphasised than in the west, means yet more demand for capital assets at the expense of , in effect, employment. But the Fed's mandate is full employment so they have to ignore the asset effect as they keep real rates low.

Indeed with the most fragile part of the economy now perhaps the banking system, to which the fed is very sensitive, they are likely to keep rates very low over-supporting the rest of the economy, which will now boom, along with related assets.

I don't know if the above is any more right than your historical analogies, but I guess the point is that there are a lot of factors out there, and millions of investors trying to assess them. Just concentrating on the one or two that a particular individual might think important is not going to confer much advantage relative for example to the firms with supercomputers running all sorts of scenarios through them.

And remeber there are ruthless operators like Cramer about who will whine about the NEED for low rates to save jobs and houses ... when in fact he just wants rate cuts to boost his portfolio and so fees. My prediction: in a couple of years he'll be boasting how his whine was just an act to try to get the Fed to overdo the easing, and he'll be gloating and haughtily ridiculing anyone who took him seriously. But we are in the same world as him, trading the very same market he is manipulating and have to take these "political" issues into account too in our investing decisions.

All the best, you are far from alone in you situation.

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