A Riddle for Hikers (and Investors)

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There's a riddle in the following story: Two friends are hiking up a mountain. After walking hours, they finally see the peak -- and head off towards it. But as they approach, they realized that what they saw was just the approach to the top of the mountain and that the peak is further up. This happens three times before they decide to take a break near a very high, sheer cliff. Then, one of the hikers stumbles and falls off the cliff! The other looks down at his friend and calls, "Are you OK?" to which the friend answers, "I don't know, I haven't hit bottom yet!"

This week 92 years ago, the Great Stock Market Crash of 1929 wiped out untold fortunes. As Barron's puts it in an interesting article, the Crash "demolished every investing strategy that didn’t include stuffing cash into mattresses."

Today, as the stock market enjoys an ongoing rally, we have to wonder where we are heading. Should we agree with the optimists who see peak after peak or the pessimists who warn of sheer cliffs? Or should we just hope to stay on the trail, enjoy the view and forego euphoria as well as depression? What's your take?

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