that's what makes this even more beautiful. you don't need to drive down to the balance sheets of each company you want to invest, he bought a representation of a basket of companies.

What's the likelihood of another market crash like the one in the 80s?

What's the likelihood of 2008 housing market crash?

I reckon that the latter is more predictable and omnious, while a sudden market crash without any signs like the one in the 1980s is less likely.

The theory that market is already efficient over a long stretch of time must be true. It reverts to its mean which is a continued bull as long as the economy can fit it.

However, this must be a tough concept to sell. "Hey I just lost 60% of your money because I bought in right at the peak recently, but please don't pull out your money yet, it will recover for sure in 5 years." Again, this example shows the difference between Bob and the average investor. Bob would've said okay, while the average investor would've taken his/her money out and getting ready to sue you for fraud, "but you promised 20% return on my money". "YES, you will get 20% compound interest on your money if you wait another 10 years, believe me the stock market always goes up".

But unlike Bob, you can definitely time your market entry.

    1. Wait for market crash.
 
    2. Buy.
 
    3. Check in a couple of years.

And people who buy after a major market meltdown, when everybody shudders at the word 'stock', the wise ones buy in. When everybody is talking about it, you run. Contrarian investing.

You can also apply this bullish bias in markets outside of stocks. Forget daytrading noise, just buy & hold.

    1. Buy Crude Oil mini futures.

    2. Hold on to it.

    3. Check back every few months instead of every few 
       minutes provided you still can meet the margin calls.

What a great article. This really have resparked my interest in investing and trading.